Profits in the first half of 2020 plunged 60.1 per cent from a year earlier to HK $802 million. Revenue declined in all business sectors during the period.

Of this total, revenue from the infrastructure business sector fell 27.0 per cent year-on-year to HK $3.344 billion, while revenue from the property sector fell 17.6 per cent to HK $8.131 billion, while revenue from the consumer goods sector fell 21.8 per cent to HK $1.736 billion. In addition, net profits in infrastructure, real estate and consumer goods fell 59.8 per cent, 53.6 per cent, 35.7 per cent to HK $408 million, HK $256 million and HK $360 million respectively compared with the same period last year. The company's comprehensive gross profit margin was basically flat at 36.8% year-on-year, but operating profit margin fell 3.0 percentage points to 29.6% year-on-year.

Revenue and net profit are expected to decline in 2020, but will rebound in 2021. As the impact of the epidemic had a significant impact on the company's operations in the first half of 2020 and is likely to continue to affect its performance in the second half of the year, we expect revenue in all business sectors to decline year-on-year in 2020. However, the decline in performance for the whole of 2020 will be narrower than in the first half of 2020. With recovery on the way, we expect the company's total revenue to grow by-9.3% / 14.8% / 2.7%, respectively, from 2020 to 2022. Our adjusted earnings per share forecasts for 2020 to 2022 are HK $2.506 / HK $3.216 / HK $3.396 respectively.

Reiterate the "buy" rating but lower the target price to HK $15.00. In view of the low valuation over the past 30 months, the dividend yield attracted and the expected recovery in 2021, we maintain our existing investment rating on the company. Our new target price of HK $15.00 is equivalent to a price-to-earnings ratio of 2020 / 2021 / 2022 or a price-to-book ratio of 2020 / 2021 / 2022.