[ET Net News Agency, 3 September 2019] Citi Research lowered its target price for China
Communications Construction (CCC)(01800) to HK$5.6 from HK$7.8 and maintained its "sell"
rating.
The research house said CCC delivered the worst 2Q in the infra construction sector, it
was the only one with earnings decline. Citi thus cut its earnings estimates by 5-8% for
2019-21.
Citi said the surge in finance cost was the key reason for the results miss. OP/finance
cost dropped to 2.2x from 4.9x. CCC earlier announced the disposal of its dredging unit to
fund PPP (public-private partnership) projects. Having said that, it looks insufficient
given the massive demand of capital to finance the remaining PPP projects. (KL)