In today’s briefing:
- China Comm Const (1800 HK): Grossly Undervalued by the Market
- Mahindra Logistics – Non-Auto Segment Driving Volume Growth
China Comm Const (1800 HK): Grossly Undervalued by the Market
- China Communications Construction (1800 HK) has bucked the trend of weaker earnings growth in the last two quarters by posting a healthy 17.7% YoY net profit growth for 1Q22.
- While gross margin contracted slightly, the good control on selling and administrative expenses have partly absorbed margin contraction. Its new contract value for 1Q22 has also reached record high.
- With government’s aggressive special purpose bond issue and infrastructure investment, we expect new contract momentum to pick up. Trading at 3.2x PER and 0.22x P/B, CCCC is massively undervalued.
Mahindra Logistics – Non-Auto Segment Driving Volume Growth
- Improved utilization levels drive margin improvement – MLL delivered a revenue growth of 10% YoY in 4QFY22 (6% below our estimate), driven by 25% growth in the non-Auto vertical. The Auto segment reported flattish growth YoY.
- Volumes improve YoY; high depreciation impacts PAT – Revenue grew 10% YoY to ~INR10.7b; 6% below our estimates.
- Highlights from the management commentary – Revenue growth was driven by the non-Auto vertical. MLL saw good traction in freight forwarding and e-commerce.
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