China State Construction new contract value soared 96.85%

Its contract wins in January amount to HKD7.5b.

CSCI announced after market closed Friday that the new contract value awarded for the January 2013 amounted to HKD7.5 billion. According to Maybank Kim Eng, this represents a YoY growth of 96.85% and a 18.75% completion of full year target of 2013 (No less than HK$40 billion). 

Here's more:

This also implies another HKD 2.6 billion new contract won since the last announcement in mid-January. The new contracts awarded include two public housing contracts in Macau with total attributable contract value of HKD 2.34 billion.

As on 31 January 2013, the on-hand contract value amounted to approximately HKD99.74 billion, among which the backlog was approximately HKD63.41 billion, representing a YoY growth of 24.55%, which meets the Group’s works in next three years.

As for repayment from BT projects,  the company announced that they have received all BT repayments (another Rmb 150m) from Government in Tianjin Affordable Housing Projects. At this point, the transfer process of the project was completed and the project has become CSCI’s first affordable housing project that CSCI completed collection of all repayment.

Implication: Good figures but not something unexpected. The amount of new contract won in January was ahead of average run rate required and thus a slowdown in February (CNY impact) is likely. The BT repayments should also boost investors’ confidence. 

Action: CSCI is trading at 17.8X and 14X our FY12 and FY13 PER estimates, respectively. Maintain Buy with target price unchanged at HKD11.