Foundation contractor bests HSI blue chips
Construction stocks are often overlooked, in Hong Kong at least, given the unsexy image of construction in the eyes of investors who prefer more exciting fare such as telecoms, banks and property.
Still it may well come as a surprise that a brave investor could reap a tidy capital gain if he bought into construction plays.
For the third quarter that ended Monday, he could not have done any worse than pick foundation contractor Tysan Holdings (0987).
Its stock price shot up by 44.7 percent during the third quarter of this year to close at HK$2.72 per share on Monday.
This beat the five best performing stocks among the Hang Seng Index blue chips during the same period, among which was the best performing blue chip Macau casino operator Galaxy Entertainment (0027) which had climbed 43.2 percent.
Year-to-date, that is to 30 September, the price of the Tysan shares has risen 90 percent.
By way of comparison, the Hang Seng index rose 2056 points during the third quarter, representing an increase of 9.9 percent over the second quarter.
Of course, not all construction stocks performed the same.
Mid-sized contractor Chun Wo Development Holdings (0711) which has a more diversified workload than Tysan’s, managed to lose money for investors, if they bought in the third quarter, shedding 7.6 percent to 49 HK cents during the period.
Its share price has lost 14 percent year-to-date.
Paul Y Engineering, now calling itself Louis XIII Holdings (0577), did better with its share price climbing 13.7 percent to close at HK$6.9 percent.
Still year-to-date, its share price has slid 14.8 percent.
For the mainland construction stocks, investors in China Railway Construction (1186) and China Railway Group (0390) would have been pleased to see share prices climbing 21.7 percent and 18.4 percent respectively during the third quarter.
However the share price of construction giant China State (3311) had a lackluster third quarter, edging up only 3.3 percent.
Still year-to-date, China State’s stock has outperformed its two rivals, climbing 34 percent while the share price of China Railway Construction and China Railway Group has slid by 6.9 and 6.4 percent respectively.
Asked to comment, a boss at a local listed contractor said one should not read too much into the performance of share prices as for some stocks, the stock market could in fact be behaving rationally.
“Also this industry is so volatile that no wonder people are not paying attention,” he said.
“I guess only if the profit increased significantly next year (I hope) then we may be able to see some change in share price,” he added.