February 3, 2016

CII – Average target price is 22% higher than current price

CII is a combination of investments across the value chain of infrastructure development:

  • Infrastructure (LGC – HOSE): manage infrastructure development projects under BT and BOT forms; develop new infrastructure projects
  • CII E&C and Services: conduct construction works for LGC transportation infrastructure projects and SII water infrastructure projects; supply operations services related to BOT projects.
  • CII Water (SII – HOSE): invest in water infrastructure projects; offer water supply services
  • CII Land: real estate developer. Current projects include: Diamond Riverside, 152 Dien Bien Phu and Thu Thiem Urban Township.

According to analysts, in 2015, CII will achieve earnings per share of 2,388 dong, due to 99 billion dong loss in Q4/2015 from the reserve provision for MPTC and exchange rate loss from the conversion of 10 billion dong of Goldman Sachs bonds.

From 2016 – 2020: CII Bridge and Road will increase its profits by 50% in 2016 due to 100% increase in toll tariffs for several projects (Phan Rang – Thap Cham) and the launch of additional roads (Rach Mieu and DT741).

We forecast that in 2016, CII will experience strong growth: revenue increases +76.4% (reach 3,668 billion dong), profit before tax increases +36% (reach 1,223 billion dong), profit after tax increases +42% (reach 838 billion dong, corresponding with EPS of 3,078 dong).

CII Management Team also agreed to pay out 20% cash dividend from 2016 onwards, corresponding to dividend/price ratio of 9%, based on current shares price.

We have valuated CII based on 3 methods: (i) compare P/E – P/B (27.252 dong / share); Discount cash flow (26.953 dong / share) and Sum of Parts Valuation (27.100 dong / share). We have arrived at the target price for CII at 27.252 dong / share, 22% higher than current market price.

According to Mr. Nguyen Ngoc Thach, Head of Individual Customers Brokerage Division 6 at Saigon Securities Inc. (SSI) – excerpt from “[Goc nhin moi gioi] Tim kiem loi nhuan trong thi truong di ngang”on NLD newspaper.

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