CSCI pins growth hopes on casinos and housing

Construction firm aims to win HK$40 billion in contracts this year after profit soars 41 per cent

PUBLISHED : Friday, 22 March, 2013, 12:00am
UPDATED : Friday, 22 March, 2013, 4:40am

China State Construction International (CSCI) is banking on the boom in Macau's casino construction, as well as affordable housing in Hong Kong and on the mainland, to drive its revenue and profits.

CSCI aims to win at least HK$40 billion in new contracts this year, more than its HK$36.8 billion of new contracts in 2012. It hopes to grow its net profit by at least 20 per cent. The Bloomberg consensus estimates the firm's net profit will rise 29.6 per cent to HK$2.76 billion.

The construction company hopes to win at least HK$15 billion of affordable housing contracts this year, up from HK$12.3 billion in 2012.

This year, CSCI would allot HK$6 billion for capital expenditure, slightly more than the HK$5.9 billion spent in 2012, said vice-chairman and chief executive Sammy Zhou Yong.

More than 80 per cent of this year's capital expenditure would be devoted to affordable housing and infrastructure projects on the mainland, while the rest would go to Hong Kong and Macau, he said.

The central government aimed to have construction started on at least 6.3 million units of affordable housing and construction completed on at least 4.7 million units of affordable housing this year, said CSCI. The company would consider affordable housing as its keystone in expansion on the mainland, it said.

"The company will capitalise on the synergy between Hong Kong and Macau, and place its focus on mega-casino and public housing projects. With the Hong Kong government providing public housing, government projects will be a main driving force of the construction industry for the coming three years," the state-owned firm added.

Chief Executive Leung Chun-ying planned to make at least 100,000 public housing units available in Hong Kong until 2018, with an estimated contract value of HK$34 billion, said a Ping An Securities report.

If CSCI secured one-third of these contracts, it would win HK$11.3 billion of contracts, equal to 20 per cent of its contract backlog at the end of last year, said Ping An.

CSCI's net profit soared 41.4 per cent to HK$2.13 billion last year, but this was below the Bloomberg consensus estimate of HK$2.17 billion. Turnover rose 20.7 per cent to HK$19.77 billion, below the estimate of HK$22.91 billion.

The firm will pay a final dividend for last year of 16 Hong Kong cents per share.

CSCI saw its net gearing ratio soar to 24.7 per cent at the end of last year from 8.4 per cent previously, but it aims to keep the ratio at no higher than 40 per cent this year.