报告名称：China CAMC Engineering(002051)2015 results in line; valuation attractive
报告类型：点评报告
报告日期：2016-03-22
研究机构：中金公司
股票名称：中工国际
股票代码：002051
页数：4
简介：2015 earnings up 21.2%, in line with preannouncement
In 2015, revenue fell 14.8% YoY t Rmb8.12bn, but earnings rose 21.2% to Rmb1.05bn, in line with preannouncement.The company plans to distribute two shares and dividends of Rmb3 per ten shares. It expects 1Q16 earnings to grow0~30% YoY. Conditions for phase-I unlocking of incentive shares have been met thanks to the high earnings growth.While revenue slipped YoY in 2015 as fewer orders took effect in 2013 and 2014, earnings managed to grow rapidlydriven by: 1) gross margin up 3.5ppt YoY, the highest since IPO; 2) RMB depreciation leading to Rmb280mn of FX gains,accounting for 26% of pretax profit; 3) a plunge in income tax rate. Operating cash flow surged 234% YoY thanks toadvance payments received for some projects.
Trends to watch
Positives to 2016 results: surging newly effective orders, possible write-back of bad debt provisions andsmaller investment loss. 1) While orders signed in 2015 slid 54% YoY to US$1.49bn, newly effective orders surged70% YoY to US$1.99bn, 1.6x the company’s 2015 revenue, which could drive strong revenue growth. 2) Assetimpairment losses widened significantly YoY in 2015, but the impairment is likely to be written back. 3) Investmentprojects in Laos and Canada could return to normal and hence their losses are likely to decline sustainably.
Negatives to 2016 results: lower earnings contributions from gross margin, FX gains and income tax. Weexpect a lower gross margin in 2016 as a large part of revenue will come from new projects. FX gains are unlikely tosurge further as the RMB could depreciate in 2016 by a similar magnitude to that in 2015. The income tax rate is likelyto rebound.
Earnings forecast
We maintain our earnings forecasts at Rmb1.23bn or Rmb1.58/sh (up 17% YoY) for 2016 and Rmb1.46bn orRmb1.89/sh (up 19% YoY) for 2017.
Valuation and recommendation
Maintain BUY. Given the declining sector valuation, we trim TP by 9.8% to Rmb28.5 (18x 2016e P/E). Thestock is trading at 14x 2016e P/E, quite attractive.
Risks
Slower-than-expected progress in overseas projects; smaller-than-forecasted RMB depreciation.

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