[ET Net News Agency, 19 March 2018] HSBC Global Research lowered its target price for
China State Construction (CSCI)(03311) to HK$14.4 from HK$16.5, and maintained its "buy"
rating.
The research house said CSCI's 4Q 2017 revenue only grew 3% y-y and PPP
(public-private-partnership) regulatory scrutiny held progress in check. Finance costs
were higher than expected in 2H 2017 due to a higher proportion of RMB denominated debt
and net debt to equity remained at the high end of the company's comfort zone of 40% at
the end of 2017.
On a positive note, the company posted a greater contribution from higher-margin PPP
projects which helped drive an improvement in profitability; consolidated gross margin
rose to 15.2% in 2017 from 12.9% in 2016. (KL)