中国交通建设(601800)在表现低于预期后将目标价下调至人民币5.0元

China Communications Construction(601800.SS) Reduce TP to Rmb5.0 after Weaker-Than-Expected FAI during 5M26 CITI'S TAKE After a sharp deterioration in the FAI run rate from -1.6% in 4M26 to -4.1%yoy during 5M26, we reduce our earnings estimates by 34-37% for 2026-27E, while also introducing 2028E forecast. One of the primary drags wasthe property sector falling 16.2% in 5M26 vs -13.7% in 4M26. This weakerproperty FAI would dampen CCCC on real estate development and housingconstruction. We therefore reduce our target price to Rmb5.0, from Rmb6.9,based on the same 5x PE on 2026E or -1.5SD to mean given a modest 3-yrEPS CAGR of 7% through 2028E and high gearing approaching the cap of75%. We reiterate Sell on CCCC given its highest % of rev exposure to Price (26 Jun 26 15:00)Rmb5.780Target priceRmb5.000↓from Rmb6.900Expected share price return-13.5%Expected dividend yield3.5%Expected total return-10.0%Market CapRmb52,366MUS$7,736M Official guidance seems too optimistic– CCCC officially gives guidance of 2026revenue growth at 6.8% this year. This looks quite optimistic to us, due to theworsening FAI datapoint during 5M26. We model 2% growth only for this year. Thecompany targets order growth at 2-3% to Rmb1.933tn for 2026. We believe themodest order growth target reflects a cautious stance on domestic FAI owing to atightening govt balance sheet. In addition, we expect a slowdown in growth in (…continued inside/below) Eric LauAC+852-2501-2726eric.h.lau@citi.com Alice Cai+852-2501-2704alice.cai@citi.com Andy Li+852-2501-2597andy.li@citi.com See Appendix A-1 for Analyst Certification, Important Disclosures and Research Analyst Affiliations. Bull/Bear: China Communications Construction(601800.SS) China Communications Construction Company description CCC is mainly engaged in the construction and design of transportationinfrastructure, and in dredging and port machinery manufacturing. It is thelargest port construction and design company in China, while in dredging it is Investment strategy We rate CCCC-A shares as Sell based on negative factors: 1) anticipation ofmodest earnings growth in 2026E owing to tight govt budget on FAI,particularly for transport-related developments given high penetration, 2)mounting margin pressure given negative FAI growth, 3) higher exposure toPPP projects that may face risk of project delay or even cancellation owing to Valuation Our P/E-based target price for CCCC is Rmb5, based on ~5x 2026E earningswhich is set at -1.5SD to the mean of the past decade due to high gearingapproaching the cap of 75%. We think the historical PE band is a goodreference to track earnings growth momentum instead of comparing CCCC todirect comps due to its lower EBIT /finance ratio. We project a 3-yr EPS CAGR Risks Downside risks that could prevent the shares from achieving our target priceinclude: 1) slower-than-expected FAI growth on traditional infra like tollroads, highways, ports to which CCCC has higher exposure; 2) weaker-than-expected counter-cyclical measures to counter macro slowdown in Chinaamid a deteriorating property market where land sale remains one of the main China Communications Construction (1800.HK; HK$3.7; 2; 26 Jun 26; 16:10) Valuation Our PE-based target price for CCCC is HK$4, based on ~4x 2026E earnings,which is set at -1SD to the mean of the past decade due to high gearingapproaching the cap of 75%. We think the historical PE band is a goodreference to track earnings growth momentum instead of comparing CCCC to Risks Downside risks that could prevent the shares from achieving our target priceinclude: 1) slower-than-expected FAI growth on traditional infra like tollroads, highways, ports in which CCCC has higher exposure; 2) weaker-than-expected counter-cyclical measures to counter macro slowdown in China dueto weaker financial strength amid worsening property market; and 3) worse- China Railway Group (0390.HK; HK$3.35; 1; 26 Jun 26; 16:10) Valuation Our HK$4.8 target price for CRG-H is based on ~4x 2026E PE, in-line witharound -1SD to the historical mean. This is backed by a 3-year forwardearnings CAGR of 4% through 2028E. We believe the PE target is justified bybetter prospects based on: 1) the company's efforts towards financialdeleveraging; and 2) high backlog to revenue ratio of ~4x, which should Risks Key fundamental upside/downside risks to CRG shares achieving our targetprice include: 1) higher-/lower-than-expected railway FAI; 2) higher-/lower-than-expected margin generated in the overseas market; and 3) better-/worse-than-expected contribution from the property and mining China State Construction (3311.HK; HK$7.02; 1; 26 Jun 26; 16:10) Valuation Our target price for CSCI of HK$12 is based on ~6x 2026E P/E. The PE target isin line with -0.5SD to mean. Our TP implies 0.8x PB for 2026E, which isequivalent to -0.5SD. We employ a conservative -0.5SD despite infraconstruction outlook being modest in China. However, our model projects a3-yr EPS C