According to Futu News on April 22,$TJCD (02515.HK)$Today's dark market opened low, closing down 16% to HK$2.10, with a turnover of HK$4.120,400, with a total market value of HK$453 million; 2,000 shares per lot, excluding handling fees, lost HK$800 per lot.

Market Source: Futu Securities Securities>

Investment highlights

Construction qualifications and permits for various types of projects: According to the Frost & Sullivan report, there were 2,547 construction companies and 3,351 construction companies in Tianjin in 2022 and 2023, respectively. Among them, only 3 and 4 construction companies have both petrochemical engineering and highway engineering construction qualifications, respectively. The company is the only private construction company. Compared with construction companies with fewer qualifications, in addition to petrochemical engineering and highway engineering construction qualifications, the company also has municipal utility engineering and construction engineering qualifications, enabling them to participate in a wider range of projects. At present, the company has 25 qualifications related to its engineering construction business, including two first-level construction qualifications: first-level general contracting qualification for petrochemical engineering construction and first-class qualification for foundation engineering professional contracting.

Leading market position: Over a period of track record, through more than ten years of operation, the company has established a reputation in the Tianjin construction industry. It has contracted 145 construction projects and served 67 customers (including government departments, state-owned enterprises and private enterprises). As of December 31, 2023, the company had a total of 27 projects under construction (including ongoing projects and projects undertaken by it but not yet started), and the total contract amount (excluding change orders) was approximately $262.2 million. Since the end of 2020, in order to seize the business opportunities brought by the Tianjin local government's massive investment in large-scale infrastructure projects, the company adjusted its business focus from small and medium-sized engineering construction projects to large-scale engineering construction projects to expand its business and enhance its market position in the Tianjin construction industry.

Risk warning

Influence of government supervision: The company's business operations are regulated by various laws, regulations and policies enacted by government agencies relating to the engineering construction industry. Requirements relating to the renewal or granting of construction works and project qualifications, licences and permits, approvals, and compliance with various industry standards and regulations may be updated or amended. The business and financial situation of the company's customers is also affected by the demand for engineering construction services, etc., which may in turn affect the customer's demand for the company's services.

Fierce competition in the industry: During the track record period, the company's business was concentrated in Tianjin, so it faced fierce competition within the construction industry. According to Frost & Sullivan's report, there were 2,547 construction companies in Tianjin in 2022. Based on Tianjin's construction revenue in 2022, the company's market share in the overall engineering construction market was 0.1%. On the other hand, the municipal public works industry in Tianjin is highly fragmented. In 2022, in terms of municipal utility revenue, the five major municipal private construction companies accounted for about 3.0% of the total market share of all municipal public works companies in Tianjin.

Edit/Irene