China State Construction (3311 HK, HK$1.70) - Forms JV with parent, sustains momentum into China

Forms JV with parent to bid PRC projects.  The company has announced that it has formed a JV with its parent on 9 Apr for submitting tenders to participate in infrastructure construction projects in the PRC.  The initial registered capital of the JV is RMB250m.  The news come on the back of the signing of the sub-construction engagement agreement with the 62.5%-parent CSCECL (see our post "Taking a step towards the RMB4,000b") on 2 Apr.

Sustaining momentum into China.  CSCI is clearly intent on maintaining momentum to capture infrastructure construction opportunities in mainland China and this JV is another step in realising this goal.  As we noted previously, near term share price catalysts and re-rating would come in the form of announcements relating to either 1) developments to allow the company to participate in China projects and/or 2) announcements of project wins in China.

Maintain Trading BUY call.  The counter has rallied 20.6% since our last post and we maintain our Trading BUY call on the counter, which is currently trading at 7.2x FY12/09F and 6.2x FY12/10F P/E on consensus.