[ET Net News Agency, 21 June 2018] HSBC Global Research cut its target price for China
Railway Construction Corporation (CRCC)(01186) to HK$13.6 from HK$14, and retained its
"buy" rating.
The research house thinks CRCC remains on track to deliver double-digit revenue and
earnings growth in 2018 and 2019, despite overall Chinese infrastructure investment growth
appearing to have decelerated in recent months to high single digits. This is likely
caused by better access to project funding in a deleveraging environment.
Completion of Chinese PPP project scrutiny and recent policy on asset management
regulations could help market share gain for major contractors including CRCC. CRCC has
the lowest financial leverage among the Chinese listed construction companies, which could
help its ability to win new contracts and manage rising financial cost pressures for
domestic projects.
CRCC's board recently approved the potential listing of China Railway Construction Heavy
Industry (CRCHI) on the HK stock exchange. HSBC estimated CRCHI generated an operating
profit of RMB1.6bn in FY2017. The research house see this as a catalyst. (KL)