Asia Pac ECM and Index Rebal, Shenton Research

Ke Yan, CFA, FRM

Asia Pac ECM and Index Rebal

Asia Pac IPO & Placement Research, China Biotech

DZT Research

DZT Research is an independent Asia Pacific equity specialist. Our quantitative research covers index rebalancing flows, alongside exchange data analytics accross Asia Pacific. On the equity capital markets side, we focus on Asia Pacific ECM, especially biotech and TMT. Our lead analyst is frequently cited by international media.

Quantitative Analysis

<ul>
<li>We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 23rd.</li>
<li>The average A-H premium changed by -1.6ppt weeok on week, led by consumer staples, communication services, energy and offset by information technology, real estate.</li>
<li>We highlight weekly changes in A-H premium for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao Glass, Shenhua, China Minsheng, Shanghai Junshi, Luoyang Glass.</li>
</ul>


We analyse the changes of A-H premium on 142 stocks over the last week. The average A-H premium was 111.8% as of Dec 23rd.
The average A-H premium changed by -1.6ppt weeok on week, led by consumer staples, communication services, energy and offset by information technology, real estate.
We highlight weekly changes in A-H premium for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao Glass, Shenhua, China Minsheng, Shanghai Junshi, Luoyang Glass.


A-H Premium Weekly (Dec 23rd): Xinjiang Gold Wind, Haier Smart Home

HK/China Equity Long-Short

Osbert Tang, CFA

Equity Bottom-Up

China Communications Construction / Equity Bottom-Up

China Communications Construction (1800 HK)

<ul>
<li>
<a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> should see positive new contract momentum in 2H22. We also expect softening in cost pressure to bring about better margin. </li>
<li>It is actively looking to recycle and realise the value of its assets and good progress are expected in 2H22. Such moves will narrow the currently deeply discounted 0.18x P/B. </li>
<li>With order backlog amounting to 4.6x of annualised 1H22 revenue, earnings prospects are well secured, making its FY22F PER of 2.6x and FY23F of 2.3x very cheap.</li>
</ul>



China Communications Construction (1800 HK) should see positive new contract momentum in 2H22. We also expect softening in cost pressure to bring about better margin. 
It is actively looking to recycle and realise the value of its assets and good progress are expected in 2H22. Such moves will narrow the currently deeply discounted 0.18x P/B. 
With order backlog amounting to 4.6x of annualised 1H22 revenue, earnings prospects are well secured, making its FY22F PER of 2.6x and FY23F of 2.3x very cheap.


China Comm Const (1800 HK): Key Takeaways from Post-1H22 Call

<ul>
<li>We analyse the changes of A/H premium on 139 stocks over the last week.</li>
<li>Consumer, real estate, and industrials led the decrease in A-H premium, while information technology was the only sector with A-H premium increases.</li>
<li>We highlight Asymchem Lab, China Comm Construction, Conch Cement, Zhesheng Bank, Anhui Express, and CICITC Securities. </li>
</ul>


We analyse the changes of A/H premium on 139 stocks over the last week.
Consumer, real estate, and industrials led the decrease in A-H premium, while information technology was the only sector with A-H premium increases.
We highlight Asymchem Lab, China Comm Construction, Conch Cement, Zhesheng Bank, Anhui Express, and CICITC Securities. 


A-H Premium Weekly: Asymchem Lab, China Comm Construction

<a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> (CCCC) is definitely one of the worst performing infrastructure-related stocks this year, with 30.2% collapse in its share price YTD. In our view, this should have significantly reflected the concerns on the weak 1H20 result (-37.2% YoY), surge in credit impairment, tight financial position and potential US sanctions. In the post-1H20 result investor call, however, management has already suggested that its profitability should see sequential improvement in 2H20. At 4.2x PER and 0.26x P/B on 12-month forward basis, valuations are clearly inexpensive, but there is likely continue pressure on share price in the near term as the market digests negative news. However, we are positive on its prospects with the resumption of toll collection, acceleration of project construction and lower credit impairment. A successful issuance of REIT on its underlying toll road assets will kick-start a re-rating with a narrower discount to book value, in our view.

China Communications Construction (1800 HK) (CCCC) is definitely one of the worst performing infrastructure-related stocks this year, with 30.2% collapse in its share price YTD. In our view, this should have significantly reflected the concerns on the weak 1H20 result (-37.2% YoY), surge in credit impairment, tight financial position and potential US sanctions. In the post-1H20 result investor call, however, management has already suggested that its profitability should see sequential improvement in 2H20. At 4.2x PER and 0.26x P/B on 12-month forward basis, valuations are clearly inexpensive, but there is likely continue pressure on share price in the near term as the market digests negative news. However, we are positive on its prospects with the resumption of toll collection, acceleration of project construction and lower credit impairment. A successful issuance of REIT on its underlying toll road assets will kick-start a re-rating with a narrower discount to book value, in our view.

China Comm Const (1800 HK): Key Takeaways from Post-1H20 Result Investor Call

We believe the valuations of <a href="https://www.smartkarma.com/entities/china-communications-construction-co-ltd" target="_blank" data-smartkarma-citation="entities:265:1" rel="noopener">China Communications Construction (1800 HK)</a> - 0.27x P/B and 3.9x PE (on a 12-month forward basis) - have well factored in concerns including tight cash flow, high gearing, heavy investments and risk of overseas projects. In fact, such valuation multiples are almost at 2 SD below the average in the last five years, and we see further downside limited.In our view, there are a number of drivers that can support a re-rating of the stock over the next 12 months: 1.) infrastructure spending and new project momentum, 2.) beneficiary of government's infrastructure REIT program, 3.) resumption of toll road collection and profit recovery in 2H20, and 4.) share buyback.

We believe the valuations of China Communications Construction (1800 HK) - 0.27x P/B and 3.9x PE (on a 12-month forward basis) - have well factored in concerns including tight cash flow, high gearing, heavy investments and risk of overseas projects. In fact, such valuation multiples are almost at 2 SD below the average in the last five years, and we see further downside limited.In our view, there are a number of drivers that can support a re-rating of the stock over the next 12 months: 1.) infrastructure spending and new project momentum, 2.) beneficiary of government's infrastructure REIT program, 3.) resumption of toll road collection and profit recovery in 2H20, and 4.) share buyback.

China Comm Const (1800 HK): Every Dog Has Its Day

China

China Communications Construction Company Limited offers transportation infrastructure construction services. The Company constructs ports, waterways, highways, bridges, and other infrastructures. China Communications Construction also operates real estate development.

China Communications Construct (601800 CH)

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China Communications Construct (601800 CH)

A-H Premium Weekly (Dec 23rd): Xinjiang Gold Wind, Haier Smart Home

We analyzed A-H premium changes in the past week and highlight A-H premium changes for Xinjiang Gold Wind, Haier Smart Home, Weichai Power, Fuyao...

Ke Yan, CFA, FRM

China Comm Const (1800 HK): Key Takeaways from Post-1H22 Call

Healthy earnings growth is expected to sustain into 2H22 on the back of stronger revenue and cost control. New contract momentum will stay...

Osbert Tang, CFA

A-H Premium Weekly: Asymchem Lab, China Comm Construction

We highlight weekly A-H premium changes of Asymchem Lab, China Comm Construction, Conch Cement, Zhesheng Bank, Anhui Express, and CICITC Securities.

Ke Yan, CFA, FRM

China Comm Const (1800 HK): Key Takeaways from Post-1H20 Result Investor Call

China Communications Construction (1800 HK) is definitely one of the worst pe

Osbert Tang, CFA

China Comm Const (1800 HK): Every Dog Has Its Day

We believe the valuations of China Communications Construction (1800 HK) - 0.27x P/B and 3.9x PE (on a 12-month forward basis) - have well factored...

Osbert Tang, CFA

Price Gauge

52-week Range

Market Cap (USDm)

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