Are Chinese buildings undervalued?

China Construction Co. (601668.SH, hereinafter called "Chinese Architecture"), which has launched the Battle of "4.18" (4.18 yuan for the price of Chinese construction), is facing greater challenges.　　September 29, China's construction to create the market since the lowest closing price of 3.40 yuan, followed by a few trading days rebounded, but from the issue price is still a distance. The aura of China's building "the largest single IPO in 2009" has faded from the 50 times-fold price-to-earnings ratio of the IPO to the 11 times-fold price-earnings ratio in September 2010.　　What happened in the meantime? Mengqingyu, a Chinese architect, said in an exclusive interview with the reporter that it was not management complaining about the market, "on the contrary, the biggest valuation crisis that has been faced since the listing of Chinese buildings has given us an opportunity to review ourselves profoundly." Although the company's performance has been growing, the strategy is clearer, but the stock price can not go against the trend, perhaps we and the capital market communication problems.　　"The adjustment of the professional plate business of Chinese architecture has begun."　　Stock prices continued to slump last July 29, the Super large market shares of Chinese construction on the Shanghai, stock prices in the day to create a high of 7.96 yuan after the jump, and then nearly a year time is constantly shaking lower.　　April 19, 2010, in the face of the State Council launched a combination of real estate control policies, China's construction with the real estate sector tumbled 3.32%, close to 4.08 Yuan, the first closed under the issue price below, and then, despite the 6 July with the market out of the rally, but overall, the stock prices have always remained under the issue of　　According to the company 2009 reported that China's building to achieve business income of 260.4 billion yuan, an increase of 28.8%, the total profit of 12.9 billion yuan, an increase of 87.7%, for the first time into the "Central enterprise profits over the ranks of the billion club." 2010.5 Annual report shows that the first half of China's building to achieve sales revenue 158.2 billion, an increase of 42.1%, attributable to the parent company shareholders net profit of 4.63 billion yuan.　　In response to earnings per share of 0.15 yuan, an increase of 94.8%, CICC believes that the data exceeded market expectations of 25%. However, these did not lead to a rebound in Chinese construction stock prices.　　The chairman of China Construction Yi June said in the interim results, the first half of this year, the company's board of directors and senior management team in the face of more difficult, greater pressure of the situation, it is not easy to achieve such success.　　Real Estate risk?　　The real estate business of Chinese construction is the most concerned by many institutional investors. As China's largest building real estate integrated enterprise, China's architecture is the only home ownership, municipal, highway three types of special Grade general contractor qualification of construction enterprises. According to the 2010 Interim results report, China's construction revenue accounted for more than 72.2% of the housing construction business gross profit margin of only 7.4%. and accounted for 11.2% of real estate development business, creating operating profit of 4.57 billion yuan, an increase of 32.7%, accounting for more than half of the total operating profit. When a large number of property shares, such as Vanke, rebounded sharply as a result of their performance,Chinese construction shares have remained flat. In the first half of this year, China Sea Real Estate (0688. HK, China Construction Holdings 52.3%) business income of 16.98 billion Hong Kong dollars (14.84 billion yuan), net profit amounted to HK $5.07 billion (4.43 billion yuan), the year-on-year growth of 12.8% and 66.7% respectively, More than 2.81 billion yuan Vanke more than 60%, become the housing enterprise profit leader.　　But China's good performance abroad still fails to reflect the price of Chinese construction.　　Guo Xin Securities analyst Chupo Accept this reporter interview analysis, China's construction stock price downturn and this year's market style-related, a a-share capital flow differentiation, small and medium stock trend is very strong and large market stocks are not in pursuit.　　GF Securities analyst Shen Also to this reporter expressed a similar view, because of concern about the real estate macro-control policy of further promulgation, Chinese architecture as a large stock, it is difficult to appear black horse posture. There are also concerns about the construction of Chinese construction in the capital market. Prior to this, China's construction has made great efforts to participate in the construction of the strategic plan, and recently intervened in two housing construction projects.　　One is the public rental housing project in Chongqing, the second is Beijing Fengtai C9 Block Resettlement House project. Some fund analysts worry that the company's participation in housing construction will not bring a lot of profits, but may face the risk of loss. The Chinese construction management believes that through good internal cost control and management, the cost risk is completely controllable. Moreover, in the situation that the local government has a large amount of funds to build the housing, the company can obtain more resources through the profit model of the integrated operation of the city.　　This kind of profit pattern already in Xi ' an, Beijing Mentougou and so on many regions launches. The analysts interviewed were generally not aware of the mode of accounting and profitability. So far, China's architecture has not yet provided a successful case for the market, despite its promising prospects and limited construction schedule.　　China's architecture has developed an integrated development strategy for the internal industry chain, and too complex financial reports have puzzled many analysts. The confusion over valuations has caused analysts ' serious disagreements over the valuations of Chinese buildings. Analysts used different valuation methods. The valuation of the Chinese architecture is that some of the professional plate valuation is significantly higher than the Chinese architecture, while the Chinese architecture has the corresponding business sector, including design business, decoration business, garden construction, infrastructure construction, commercial concrete, steel structure, installation and so on.　　But under the glare of the real estate business, these businesses cannot contribute to the overall valuation of Chinese architecture. According to the absolute valuation method, the current market value of China's construction is 108 billion yuan, in which China's construction holds the overseas proportion of China, China's overseas market value of 62.6 billion yuan, the construction of real estate land reserves valued at 20 billion yuan, only the real estate sector market value of 82.6 billion yuan. The construction business market value is only 25.4 billion yuan. CICC believes that the company will benefit significantly from the acceleration of the construction of affordable housing, thereby obtaining a wealth of quality resources to support itsLong-term development. But Chupo also pointed out that, according to the company's earnings forecasts per share, although the company's valuation is underestimated, but the environment, other companies also have a different degree of undervaluation, such as China CRCC.　　This year, Chupo has twice raised its earnings forecasts for Chinese architecture.　　Chupo that the more scientific valuation method should be divided into the various business sectors of Chinese architecture, respectively, valuation and then add total.　　Gross margin challenges hidden in the valuation of the strange elephant is the Chinese construction of its own business and development problems.　　This reporter according to the first half of the statistical data found that China's construction of various professional plates, strong or weak, some professional plate margin is not the industry leader. For example, China's architecture of Chinese and foreign gardens of the gross profit margin of only 7.6%, while the Oriental Garden's gross profit margin of 32.2%; in the construction of steel gross profit margin of 10%, the industry leader in Seiko Steel structure reached 13.9%; in the construction of decorative gross margin of 8.2%, but the gold mantis to 15.8%.　　The gross margin of the Chinese builders is also slightly lower than the industry-leading level.　　China's construction management to further explain that China's many professional sectors of the building, although large, profitability is not the industry's strongest, but from a side of the description, if the company to the professional sector of the resource integration, profit rising space is also very large.　　September 27, the construction of Decoration Group Co., Ltd. Jie, integrated in the construction system within the 7 advantages of decoration company, will be scattered in the end of next year in the construction of the Engineering Bureau of more than 10 decoration company, further improve the gross profit margin to the decoration group to achieve the strongest industry. According to our correspondent understand, the company will invite world-class consulting companies to formulate strategic planning, to begin to integrate the internal resources of the company, change the assessment system, the real use of resource advantages. China Construction Chairman Yi Jun recently also revealed in the company's interim results Roadshow, "Twelve-Five planning", China's architecture will strive to become the world's top 100 building enterprises, the current Chinese architecture ranking is the 187th place.