[ET Net News Agency, 12 June 2019] Goldman Sachs lifted its target price for China
State Construction International (CSCI)(03311) to HK$7.5 from HK$6.6 given easing concerns
on the sustainability of its business model and maintained its "neutral" rating.
The research house believes CSCI's sharp de-rating since 2H 2017 has largely come to an
end as Goldman sees concrete signs of stabilization and management's effort to bring the
business back on track.
That said, Goldman sees limited catalysts for the stock to re-rate from current levels
and believes the valuation is a fair reflection of the company's cash-based return profile
(2020 CROCI of 10.4% versus a historical average of 12.8%).
Goldman cut its 2019-20 earnings forecasts by 19%-21%, mainly driven by slower revenue
conversion of mainland China investment projects. (KL)