Ubs: China Communications Construction (1800.HK) slightly lowered its target price to HK $6.6 after underperforming last year

China Communications Construction (1800.HK) saw its net profit increase by 11% last year, according to a ubs research report.Excluding unusual items and interest charges on perpetual notes, recurring net profit rose 13 per cent, just 4 per cent below the bank’s forecast.The bank maintained its “buy” rating and slightly lowered its target price for Hong Kong shares to HK $6.6 from HK $6.7.The most notable aspect of CCCC’s performance last year was an 18% year-on-year increase in new construction contracts, according to the report.Revenue increased 51% to 7.8 billion YUAN, with a COMPOUND annual growth rate of 11%.Gross margin edged down 0.4 percentage points to 12.4%, although total revenue rose 9%.The report added that CCCC targets new contract growth of 12% and revenue growth of 6% in 2022, and management reiterated that the group will continue to focus on overseas markets and target to achieve 25% revenue share by the end of 22025.For future investment plans, the management is optimistic about new energy industries such as offshore wind farm operation and maintenance, while giving priority to its traditional advantages in the road and bridge industry.The bank maintained its positive view that C-Reits will help CCCC reduce net debt and improve cash flow performance.

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