Foundation contractors outperform in 2013

Foundation contractors outperform in 2013

Tysan share price doubles

Investors who were brave enough in 2013 to buy shares in the foundation contractors listed on the Hong Kong Stock Exchange were rewarded with handsome capital gains, on paper at least.

Tysan Holdings (0687), the parent of Tysan Foundation, was the star performer among all the listed contractors, with its share price doubling during 2013 to close at HK$2.86 on the final day of trading on Tuesday.

By comparison the Hang Seng Index edged up by only 2.87 percent during the year to close at 23,306.39 points.

The surging performance of Tysan’s stock price compared favourably with the top performing blue chip company, casino operator Galaxy Entertainment (0027), whose share price jumped by 129.2 percent to close at HK$69.55.

Chinney Alliance Group (0385), which owns Kin Wing Foundation, didn’t do too badly either with its share price surging 57.9 percent to close at 60 HK cents.

For the other local contractors on the stock exchange, such heady stock price performance would be wishful thinking.

The only contractor to get a double digit increase in its share price was Chevalier International Holdings (0025) whose share price rose 27.44 percent during 2013 to close at HK$13.56.

All the other contractors experienced more moderate share price increases or decreases.

Hsin Chong Construction Group (0404), currently doing a lot of casino work in Macau, saw its share price edge up 8.11 percent to close at HK$1.2.

Chun Wo Development Holdings (0711) however could not prop up its share price, losing 10.53 percent during 2013 to close at 51 HK cents.

The parent of the Paul Y contracting family, Louis XIII Holdings (0577), now reconfigured as a luxury casino and hotel developer, also lost money for its investors with its share price sliding 3.58 percent to close at HK$7.81.

For the listed mainland contractors, only China State Construction International Holdings (3311), the parent of China State Construction Engineering (HK), made a positive return for investors with its share price leaping by a healthy 49.46 percent to close at HK$13.9.

The share price performance of contractors listed on the Hong Kong Stock Exchange  (Danny Chung)

The share price performance of contractors listed on the Hong Kong Stock Exchange (Danny Chung)

This was despite fears of its exposure to mainland projects where the clients were local governments with heavy debts, according to a Barclays research report last August.

The share price performance of China Railway Construction Corporation (1186) and China Railway Group (0390), the preferred stock picks of the Barclay’s report, however got nowhere near China State’s.

China Railway Construction saw its share price go down by 12.37 percent to close at HK$7.72 while the share price of China Railway Group slid 11.7 percent to HK$4.

The other major listed mainland contractor, China Communications Construction (1800), the parent of China Road and Bridge Corporation and China Harbour Engineering, did even worse, with its share price plunging 16.44 percent to close at HK$6.25.

The share performance of infrastructure company NWS Holdings (0659), the parent of Hip Hing Construction, suffered similarly with its share price sliding 9.77 percent to close at HK$11.82.

While the contractors saw mixed share price performance, its main private sector clients, the big developers, did not fare any better.

Cheung Kong (Holdings) (0001), controlled by Hong Kong’s richest man Li Ka-shing, saw its share price creep up by only 2.86 percent during the year to close at HK$122.4.

At least that was better than Sino Land (0083), controlled by Singapore tycoon Robert Ng Chee Siong, whose share price plunged 23.96 percent to close at HK$10.6.

For 2014, it would appear professional investors will continue to steer clear of the listed construction companies in their portfolios.

According to a quick survey of the 2014 investment preference of eight stock analysts and fund managers by the Chinese newspaper Hong Kong Economic Times on Tuesday, not one person mentioned going into construction stocks.

Instead, they would invest in sectors such as new energy, logistics, insurance, technology, Macau casinos, tourism and the environment.

Danny Chung

 

 

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