【出版时间及名称】：2010年3月中国建筑行业研究报告
【作者】：汇丰银行
【文件格式】：pdf
【页数】：40
【目录或简介】：
Sector margins should have bottomed
out; railway investment is still rising
 We are more bullish than consensus
and expect growth to pick up from 2Q10
 Upgrade CRC and CRG from N(V) to
OW(V) and CCC to N(V)
China’s infrastructure construction sector is getting back on
track. We think margins have bottomed out and order flow
from the Ministry of Railways (MoR) continues to filter
through. The MoR has already budgeted for another increase in
railway investment in 2010 following a bumper year in 2009.
We now turn bullish on the sector for the following reasons:
 Compensation for rises in raw material prices of past
projects is back on track, contributing to margins from
4Q09; every 10bps margin gain will lift earnings by
3.6% for CRC and CRG in 2010, respectively.
 By 2Q10, most large projects started last year will
definitely be more than 20% complete – the accounting
hurdle that must be cleared before profits can be booked.
 Despite the perceived slowdown in China’s FAI,
RMB700-800bn will be spent on expanding the rail
network this year (vs 2009’s RMB600bn).
The recovery in margins and filtering through of new
railway contracts will rekindle growth momentum, driving
share price performance. The sector is trading at or close to
the lowest PE range since they listed and are now lower than
the international peer average. The risk is on the upside.
We forecast CRC and CRG’s gross margins to recover by
0.4 and 0.5ppt in 2010, lifting our earnings estimates by 3%
on faster project completion rates in 2010 (10% and 6%
above consensus, respectively). While we think the full-year
2009 results in late April will disappoint many, they will
show that margins have bottomed, creating an opportunity
for investors to increase exposure to the sector.
We upgrade CRC and CRG from Neutral (V) to OW(V) and
change our valuation methodology from an average of midcycle
PEs and DCF to pure DCF to reflect the change in the
business cycle. Upgrade CCC to Neutral (V) on valuation.