标题：China State Construction EngineeringRapid growth of infrastructure orders; property sales slowing
发布日期：2016-02-22 14:10:25
内容： What's new CSCEC announced its January data. 1) Construction business: new orders dropped 8.7% YoY to Rmb87.2bn withdesign/construction/infrastructure -9.1%/-12.7%/+19.1%; GFA new starts/under construction/completed-14.5%/+4.9%/-28.1% YoY to 26.74mn/811.76mn/3.66mn sqm. 2) Property business: property sales +0.2% YoY toRmb12.1bn with GFA sold down 2.9% YoY to 0.95mn sqm; plus 1.47mn sqm of new land, CSCEC’s land bank reached66.81mn sqm by end-January 2016. Comments GFA new starts/completed dragged by an early Spring Festival. In January 2016, GFA new starts saw negativegrowth (vs. positive growth in November/December 2015) while GFA completed also dropped significantly, mainly dueto an earlier Spring Festival this year than last. Whether GFA new starts could stabilize remains to be seen. Sluggish construction orders; robust growth of infrastructure orders. Affected by an early Spring Festival,construction orders saw negative YoY growth in January 2016 (vs. positive growth in October~December 2015);infrastructure orders surged 19.1% YoY, driven by lower capital requirements, special funds and accelerated PPP. Sharp slowdown in property sales possibly due to personnel reshuffle. GFA sold fell 2.9% YoY in January 2016(vs. +28% YoY in 2015), posting negative growth for the first time since March 2015; in the meantime, sales in the 30medium/large cities grew 20% YoY. We think the unexpected sales slowdown could be a result of personnel reshuffle(China Overseas Land & Investment president resigned in January 2016). Valuation and recommendation Beneficiary of SOE reform; cheap valuation; maintain BUY. The stock is trading at 5.9x 2016e P/E (excludingdividends for preferred shares and perpetual bonds), the lowest in the sector and below its historical median, implyinga high margin of safety. Government measures to sustain growth and the upcoming NPC & CPPCC sessions should bringshort-term catalysts. Maintain BUY. Risks Uncertainties in management reshuffle; SOE reform disappoints.
发布日期：2016-02-22 14:10:25
内容： What's new CSCEC announced its January data. 1) Construction business: new orders dropped 8.7% YoY to Rmb87.2bn withdesign/construction/infrastructure -9.1%/-12.7%/+19.1%; GFA new starts/under construction/completed-14.5%/+4.9%/-28.1% YoY to 26.74mn/811.76mn/3.66mn sqm. 2) Property business: property sales +0.2% YoY toRmb12.1bn with GFA sold down 2.9% YoY to 0.95mn sqm; plus 1.47mn sqm of new land, CSCEC’s land bank reached66.81mn sqm by end-January 2016. Comments GFA new starts/completed dragged by an early Spring Festival. In January 2016, GFA new starts saw negativegrowth (vs. positive growth in November/December 2015) while GFA completed also dropped significantly, mainly dueto an earlier Spring Festival this year than last. Whether GFA new starts could stabilize remains to be seen. Sluggish construction orders; robust growth of infrastructure orders. Affected by an early Spring Festival,construction orders saw negative YoY growth in January 2016 (vs. positive growth in October~December 2015);infrastructure orders surged 19.1% YoY, driven by lower capital requirements, special funds and accelerated PPP. Sharp slowdown in property sales possibly due to personnel reshuffle. GFA sold fell 2.9% YoY in January 2016(vs. +28% YoY in 2015), posting negative growth for the first time since March 2015; in the meantime, sales in the 30medium/large cities grew 20% YoY. We think the unexpected sales slowdown could be a result of personnel reshuffle(China Overseas Land & Investment president resigned in January 2016). Valuation and recommendation Beneficiary of SOE reform; cheap valuation; maintain BUY. The stock is trading at 5.9x 2016e P/E (excludingdividends for preferred shares and perpetual bonds), the lowest in the sector and below its historical median, implyinga high margin of safety. Government measures to sustain growth and the upcoming NPC & CPPCC sessions should bringshort-term catalysts. Maintain BUY. Risks Uncertainties in management reshuffle; SOE reform disappoints.
