In today’s briefing:
- China Comm Const (1800 HK): 4Q22 Looks to Be a Period of Acceleration
- Hub Group, Inc. (HUBG): Sell Short
China Comm Const (1800 HK): 4Q22 Looks to Be a Period of Acceleration
- Apparently, China Communications Construction (1800 HK) has an uninspiring 3Q22, but this is mainly due to losses at concession projects and heavy credit and asset impairments.
- We estimate outstanding backlog at Rmb3.28trn, enough to cover 4.5x FY22F revenue. Expansion in 3Q22 gross margin, against declines in 1Q22 and 2Q22, is a positive development.
- Despite outperformance against major indexes YTD, CCCC still trades on 2.3x and 2.1x PERs for FY22-23. Its 0.16x P/B has overly discounted the value of underlying assets.
Hub Group, Inc. (HUBG): Sell Short
- The company is overearning due to an unusual confluence of events that increased demand for and limited supply of transportation, especially intermodal, services.
- HUB’s sales and margins surged on a 40%+ intermodal pricing increase. EBITDA margins increased 400bps
- Import volumes and port congestion are falling. Pricing is easing. Transportation could end up in a glut quickly. The weakening macro picture could take additional pressure off transportation demand.
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