Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

A buy-side analyst with over 15 years of experience investing in Asian markets and specializing in the mid-small cap space, emphasizing value investing in companies with good free cash flows/dividends and long-term holding horizons. 
Exempt Financial Adviser (EFA) under CrossASEAN Research Pte Ltd. It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity, Bottom-up Analyst

China State Construction Development (830 HK): A Short-Term Opportunity with Tremendous Upside

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

Equity Bottom-up Research

Equity Bottom-Up

China State Construction Development / Equity Bottom-Up

China State Construction Development (830 HK)

In our last report on <a href="https://www.smartkarma.com/entities/china-state-construction-development-holdings" target="_blank" data-smartkarma-citation="entities:3892:1" rel="noopener">China State Construction Development (830 HK)</a> entitled <a href="https://www.smartkarma.com/insights/china-state-construction-development-830-hk-a-short-term-opportunity-with-tremendous-upside" target="_blank" data-smartkarma-citation="insights:54001" rel="noopener">China State Construction Development (830 HK): A Short-Term Opportunity with Tremendous Upside</a>, we highlighted an opportunity to play the name before its results due to our belief that the company would report a profit alert. With this catalyst playing out now, we see limited upside in the short term.Notable highlights of the result and our conversations with management:<ul>
<li>New orders increased by 76% YoY from 2.5 bn HKD to 4.5 bn HKD in H1 FY21.</li>
<li>A 50 bps increase in gross profit margin from 13.6% to 14.1%.</li>
<li>A stated intention of decreasing net gearing from 38.7% to 10% by the end of FY21. </li>
<li>A goal of paying out 40-50% of the net profits as dividends.</li>
</ul>We believe that the stock has a reasonable valuation of 13x FY21 and 10x FY22 but provides a limited upside.  We expect a drop in profits (in line with previous years ) HoH, but an increase YoY by 70-80%.

In our last report on China State Construction Development (830 HK) entitled China State Construction Development (830 HK): A Short-Term Opportunity with Tremendous Upside, we highlighted an opportunity to play the name before its results due to our belief that the company would report a profit alert. With this catalyst playing out now, we see limited upside in the short term.Notable highlights of the result and our conversations with management:
New orders increased by 76% YoY from 2.5 bn HKD to 4.5 bn HKD in H1 FY21.
A 50 bps increase in gross profit margin from 13.6% to 14.1%.
A stated intention of decreasing net gearing from 38.7% to 10% by the end of FY21. 
A goal of paying out 40-50% of the net profits as dividends.
We believe that the stock has a reasonable valuation of 13x FY21 and 10x FY22 but provides a limited upside.  We expect a drop in profits (in line with previous years ) HoH, but an increase YoY by 70-80%.

China State Construction: Great Numbers, But Taking a Breather for Now