SIIC

SIIC: 2Q14 EPS fell 23% y/y to 0.77¢, despite the 20% rise in net profit to Rmb64.8m (flat q/q), arising from a large 56% dilution in the weighted average number of shares from private share placements. Revenue jumped 35% to Rmb381.8m (+28% q/q), mainly driven by higher construction revenue (+90%) on the substantial completion of projects, as well as higher water treatment and water supply (+19%) from contribution from newly acquired subsidiary, Shanghai Qingpu. However, operating profit declined 23% to Rmb63.9m, as gross margin narrowed 5.1 ppt to 27.4% from a higher contribution from lower-margin construction segment. Bottom line was shored up by a surge in JV contributions to $16.2m from $1.3m a year ago. Proforma NAV per share at Rmb0.38 (7.7¢) following completion of a 1b share placement to raise net proceeds of $154.8m post results (14 Jul). At $0.158, SIIC is valued at 2.3x P/B, ~20% cheaper compared to HK-listed peers average of 2.8x.