CRCCE (1786)

[Scg8866t]

Been watching this counter for while now (1786)

http://www.hkexnews.hk/listedco/listcone...825375.pdf

Ard 1.9bil rmb in cash with zero debt.

A subsidary of China Rail Construction(state owned)

Current price at 3.05 equals to 0.77x books(3.979 nav)

Prospectus mention about a 20-40% payout from earnings as dividend.

Recently IPOed(2015). Substantial shareholders include:

GIC
Temasek
Baring

They mainly 

Sell rail way track maintenance machines(80% dominance in China ranked number one in Asia)
Does overhaul serivce
Sell parts and components
Does track maintenance service

Current valuation seems enticing. Very solid shareholders and its a net net stock to me. Any opinions do share. Not vested yet.

[specuvestor]

The cash is because they raised HK$2.79b 12 months ago

Suggest you wait to see if they will pay 20-40% profit as you say

[Scg8866t]

The cash is because they raised HK$2.79b 12 months ago

Suggest you wait to see if they will pay 20-40% profit as you say

Yes, latest interim report shows a net postive operating cash flow of 291mil rmb though. I see some synergy in this business with China's one belt one road but more of a stable long term strategy(parasiting on the booming rail way business in China, many are bound to loss money operationally). Top and bottom line slightly down for 6months period yoy though.

[Scg8866t]

Up 4% today to 3.19. Which is natural, yesterdays price was an anomaly. No other rail way maintenance counter can come close to its valuation. This kind of business model in China in my view stands to reap long term benefits from China's rail infrastructure boom.

[BlueKelah]

Lol, China infrastructure spending earmarked for next 5 years has been used up this year building rails and other stuff that will probably remain empty and not used. 

Will the rails need as much maintenance if they are not going to be used from overcapacity? another zombie enterprise?

caveat emptor

[Scg8866t]

Lol, China infrastructure spending earmarked for next 5 years has been used up this year building rails and other stuff that will probably remain empty and not used. 

Will the rails need as much maintenance if they are not going to be used from overcapacity? another zombie enterprise?

caveat emptor

Even if infrastructure spending were to drop I dont see much risk in CRCCE business model. They have zero debt and a huge cash balance. You can see their maintenance and overhaul services rev are gradually increasing. With middle class exploding there, I believe there will be increased usage of trains there. Even with shanghai and Beijing rail way operating, much needed maintenance and overhaul is needed.

Do note that they also own 4 plot of lands in strategic area in China, can easily enhance value if they want to.

[Scg8866t]

Up another 4% to 3.25 today. I believe due to their parent(CRCC) just gotten a huge contract with Australia to construct their metro. See how it goes..

http://www.chinadaily.com.cn/business/20...501163.htm

[Scg8866t]

CRCCE closed 3.29 today not bad(up 4.11%)

As of today:

GIC owns 10.05%
Temasek 6.87%
Barings 7.27%

[Scg8866t]

CRCCE catapulted to 3.87

CRCCE 2016 Net Profit Up 2.38% to RMB467M

Final Div 16 Fen