Summary of the report
Company overview
Founded in 2001, the company mainly provides marine construction services to the private and public sectors, with projects throughout Hong Kong, Macau and Southeast Asia. The company's marine construction services include dredged and non-dredged foundation treatment works, reclamation works, wharf construction works, offshore facilities works and sea transport, while ship leasing and trade are the remaining sources of revenue.
The company has its own fleet specially designed for marine construction projects, and currently owns 29 ships, including pile drivers, open-hulled mud barges, plane barges, grab dredgers, cranes, tugs, anchor ships and floating wharf vessels, and a total of 67 sets of construction equipment, including cranes, excavators, bulldozers, forklifts, hammers, air compressors and generators.
The company's revenue / net profit CAGR in 2013-15 reached 20.3%, 68.3%, respectively, to HK $573 million / 96 million in 2015. Revenue from Hong Kong / Indonesia / Macau accounted for 17.5% of 2015 income, 56.2% and 26.3% respectively.
Industry status and prospects
The growth of the Hong Kong market will continue to slow in the future.
The Indonesian market has become a new growth point; Indonesia's GDP CAGR reached 5.5% in 2010-15, and the local construction industry is expected to maintain strong growth in the future as the government increases infrastructure investment nationwide.
Advantages and opportunities
Benefit from the new business opportunities brought by Belt and Road Initiative.
Business synergy benefits brought about by cooperation with strategic investors Citic Construction.
It has a wide range of ships, which can optimize marine construction engineering and ship leasing and trading business.
Weakness and risk
The construction industry has an obvious periodic nature.
Overseas business execution risk and accounts receivable risk.
Performance depends on the level of infrastructure spending by local governments.
Valuation
We calculate the company's 2015 historical price-to-earnings ratio of about 8.3-10.4 times according to the recruitment share price range, which is higher than the average of 6.5 times for the construction industry listed in Hong Kong, but the company's business is mainly in the high-growth Southeast Asia and is expected to benefit Belt and Road Initiative in the future. We give the company an IPO rating of 6.