Daiwa Research cut its target price for China Railway Group (CRG)(00390) to HK$5.5 from HK$5.7 and reiterated its "buy" rating.
The research house cited CRG management stating it recorded double-digit new orders growth in 5-month 2020, led by railway, road, and housing construction projects, while its
urban transit orders stayed sluggish.
Thanks to effective work resumption in April, its revenue growth for 5-month 2020 turned positive. Management maintained its full-year target of high-single-digit revenue growth. CRG will continue to lower its liability-to-asset ratio by conducting asset securitisation and controlling inventory in the property sector and contract assets/liabilities.
Daiwa lifted its 2020-22 core EPS forecast by 1% on higher growth assumptions.
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