GUANGDONG Investment is a safe China play because its activities embrace virtually all sectors of the mainland economy instead of relying on a few.
The company's share price has performed reasonably in recent months, especially when compared with the H shares, which have been affected by concerns over inflation in China.
The latest economic data, released by the State Statistical Bureau, indicate inflationary pressures are easing, brightening the prospects for the company's activities, which cover all sectors of China's economy including manufacturing, property, infrastructure and services.
In addition, Guangdong Investment has direct exposure to Guangdong province, the fastest-developing region in China and Asia.
The company has relied on profits generated by its Guangdong Tours and property operations. But a considerable improvement in the quality of its earnings is underway, with investments in the manufacturing and infrastructure sectors growing rapidly and now starting to pay off.
Brokerage Mees Pierson Securities expects the company to show strong internal growth in the next few years. Much of it will come from its brewery operations. Both Shenzhen Brewery and Guangzhou Malting are expanding capacity to meet fast-growing demand for beer in Guangdong.
