China Communications Construction (SEHK:1800): Assessing Valuation Following 9-Month Revenue and Earnings Decline

China Communications Construction (SEHK:1800) reported its earnings for the first nine months of 2025, highlighting declines in both revenue and net income compared to the same period last year. This has drawn close attention from investors.

See our latest analysis for China Communications Construction.

Despite softer earnings this year, China Communications Construction’s share price has held steady in the short term and is now trading at HK$5.2. Momentum has faded lately, as shown by the 10.3% drop in 3-month share price returns. However, long-term holders have enjoyed a 1-year total shareholder return of 1.9% and an impressive 87.9% over three years. This reflects the company’s substantial ability to create shareholder value over time.

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With shares lagging in recent months and trading noticeably below analyst price targets, the big question for investors now is whether China Communications Construction is undervalued at current levels or if the market already reflects future growth potential.

Price-to-Earnings of 4x: Is it justified?

China Communications Construction is trading at a price-to-earnings (P/E) ratio of 4x, which signals a discount at its current share price of HK$5.2 when compared to peers and industry benchmarks.

The price-to-earnings ratio is a popular valuation metric that measures how much investors are willing to pay per dollar of earnings. For a major player in the construction sector, it helps investors judge whether the market believes in future profit growth or is pricing in risk.

At 4x, China Communications Construction’s P/E stands well below the Hong Kong market average of 12.6x and the industry average of 12.3x. It is also less than half the “fair” price-to-earnings ratio of 8.6x suggested for this company, which could be considered a level the market may move towards if positive earnings momentum returns.

Explore the SWS fair ratio for China Communications Construction

Result: Price-to-Earnings of 4x (UNDERVALUED)

However, risks such as slowing revenue growth and recent net income stagnation could challenge the company's undervaluation story in the coming quarters.

Find out about the key risks to this China Communications Construction narrative.

Another View: SWS DCF Model Weighs In

While the price-to-earnings approach points to undervaluation, our DCF model tells a different story. According to its calculation, China Communications Construction is trading above its estimated fair value. This suggests that the share price might already reflect more optimistic growth than the company is expected to deliver. Should investors trust the bargain signal, or look for more confirmation?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out China Communications Construction for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 865 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own China Communications Construction Narrative

If you have a different perspective or prefer digging into the details yourself, you can easily piece together your own story in just minutes with Do it your way.

A great starting point for your China Communications Construction research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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