Here's Why China State Construction International Holdings (HKG:3311) Has Caught The Eye Of Investors

It's common for many investors, especially those who are inexperienced, to buy shares in companies with a good story even if these companies are loss-making. Sometimes these stories can cloud the minds of investors, leading them to invest with their emotions rather than on the merit of good company fundamentals. Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad.

In contrast to all that, many investors prefer to focus on companies like China State Construction International Holdings (HKG:3311), which has not only revenues, but also profits. Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business.

View our latest analysis for China State Construction International Holdings

China State Construction International Holdings' Earnings Per Share Are Growing

If a company can keep growing earnings per share (EPS) long enough, its share price should eventually follow. That means EPS growth is considered a real positive by most successful long-term investors. Over the last three years, China State Construction International Holdings has grown EPS by 15% per year. That growth rate is fairly good, assuming the company can keep it up.

One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. While we note China State Construction International Holdings achieved similar EBIT margins to last year, revenue grew by a solid 12% to HK$114b. That's encouraging news for the company!

You can take a look at the company's revenue and earnings growth trend, in the chart below. Click on the chart to see the exact numbers.

In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of China State Construction International Holdings' forecast profits?

Are China State Construction International Holdings Insiders Aligned With All Shareholders?

Investors are always searching for a vote of confidence in the companies they hold and insider buying is one of the key indicators for optimism on the market. This view is based on the possibility that stock purchases signal bullishness on behalf of the buyer. However, small purchases are not always indicative of conviction, and insiders don't always get it right.

Belief in the company remains high for insiders as there hasn't been a single share sold by the management or company board members. But the real excitement comes from the HK$403k that Executive Chairman Haipeng Zhang spent buying shares (at an average price of about HK$8.07). Purchases like this clue us in to the to the faith management has in the business' future.

It's reassuring that China State Construction International Holdings insiders are buying the stock, but that's not the only reason to think management are fair to shareholders. Namely, China State Construction International Holdings has a very reasonable level of CEO pay. The median total compensation for CEOs of companies similar in size to China State Construction International Holdings, with market caps between HK$31b and HK$94b, is around HK$7.0m.

The China State Construction International Holdings CEO received HK$3.7m in compensation for the year ending December 2023. That seems pretty reasonable, especially given it's below the median for similar sized companies. CEO compensation is hardly the most important aspect of a company to consider, but when it's reasonable, that gives a little more confidence that leadership are looking out for shareholder interests. It can also be a sign of a culture of integrity, in a broader sense.

Is China State Construction International Holdings Worth Keeping An Eye On?

As previously touched on, China State Construction International Holdings is a growing business, which is encouraging. And that's not all. We've also seen insiders buying stock, and noted modest executive pay. If these factors aren't enough to secure China State Construction International Holdings a spot on the watchlist, then it certainly warrants a closer look at the very least. Even so, be aware that China State Construction International Holdings is showing 2 warning signs in our investment analysis , and 1 of those doesn't sit too well with us...

The good news is that China State Construction International Holdings is not the only stock with insider buying. Here's a list of small cap, undervalued companies in HK with insider buying in the last three months!

Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

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.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com