This is my private journal on Tradingview and a reason why I am investing in China Communications Construction.
China Communications Construction 1800.hk or 601800.SS:
China Communications Construction meets my parameters as a super stock. It has been identified as a key player in the One Belt, One Road initiative. Earnings jumped and continue to grow. Sales are expected to continue to grow with China’s “One Belt, One Road” initiative. Forecasted order growth by the company’s management is 23%.
They have more of an international presence than its competition in the same industry, such as China Railways (0390.hk) and China Railway’s Construction 1186.hk. 8% free cash flow to equity yield expected for 2017 – 2018 Operating margins are increasing and undergoing costs reduction. Lower exposure to the property market than its peers (China Railway Group and China Railway Construction).
The company has been involved in major overseas projects, including: (1) "China-Pakistan Economic Corridor" (2) "Bangladesh-China-India-Myanmar (BCIM) Corridor" (3) "High-speed railways, expressways, and infrastructure construction in Africa" (4) "Interconnection projects between China and multiple Asian countries such as Burma, Kyrgyzstan, and North Korea" (Roann Partners of Seeking Alpha)
Political risk: There is one risk we need to consider. China Communications Construction’s operations (both overseas and domestic) are expected to be integrated with the Chinese government's policies. "Future domestic projects are dependent of the government's development plans while future overseas projects could potentially be subjected to developments of international relations between China and other countries. Adverse policies, decisions, and developments could affect China Communications Construction’s business and financial performance." (Roann Partners of Seeking Alpha)
Geographical risk: "Land-based One Belt, One Road (OBOR) projects would require the approval and cooperation from numerous national and local governments. Adverse developments (e.g. delay in approvals, chaos) in these markets could slow down project execution and delay revenue recognition." (Roann Partners of Seeking Alpha)
Conclusion: China Communications Construction is in a prime position to benefit from Chinese infrastructure policies. The company will enjoy strong growth in the next few years, supported by growing infrastructure spending both within and out of China. Projects are likely to be supported by the attractive financing of Chinese financial state-owned enterprises.
Holding Time: 3 months to 52 weeks Plan: re-evaluation of the company after 3 months to 52 weeks