An­bang boosts hold­ing in ma­jor builder

China Daily (USA) - - BUSINESS - By LI XIANG lix­i­ang@chi­nadaily.com.cn

Chi­nese in­surance con­glom­er­ate An­bang In­surance Group has sub­stan­tially boosted its hold­ings in China State Con­struc­tion En­gi­neer­ing Corp, the coun­try’s big­gest con­struc­tion com­pany, draw­ing reg­u­la­tory at­ten­tion to the pur­pose be­hind the move.

The con­struc­tion firm said on Tues­day it re­ceived an in­quiry let­ter from the Shang­hai Stock Ex­change ask­ing about An­bang’s re­cent mas­sive pur­chase of the shares.

An­bang has bought at least 363 mil­lion shares of the con­struc­tion gi­ant since Fri­day, boost­ing its hold­ings in the com­pany to 6.21 per­cent of to­tal out­stand­ing shares, mak­ing it the fourth-largest share­holder of the com­pany, ac­cord­ing to pub­lic fil­ings.

The stock ex­change ques­tioned An­bang’s sta­tus as a fi­nan­cial in­vestor and asked it to ex­plain the pur­pose of the share pur­chases and whether it in­tends to par­tic­i­pate in the oper­a­tion and man­age­ment of the con­struc­tion com­pany.

An­bang said that the pur­chases re­flect its con­fi­dence in the busi­ness prospects of the con­struc­tion com­pany.

An­bang’s move high­lighted the de­sire of Chi­nese in­sur­ers to bet­ter al­lo­cate their funds into as­sets with rea­son­able long-term yields, at a time when there is a lack of in­vestable as­sets amid the eco­nomic slow­down, an­a­lysts said.

Yang Tao, an an­a­lyst at Zhong­tai Se­cu­ri­ties Co Ltd, said the solid fun­da­men­tals and the cheap val­u­a­tion of the stock of the con­struc­tion firm are the rea­sons be­hind An­bang’s pur­chase.

“It is highly likely that An­bang will con­tinue to pur­chase the stock,” Yang said, not­ing that the stock with a price-to-earn­ings ra­tio of 7.8 times is sub­stan­tially un­der­val­ued, given the av­er­age PE ra­tio of 15 of State-owned con­struc­tion com­pa­nies.

Lu Ping, an an­a­lyst at China Mer­chants Se­cu­ri­ties Co Ltd, said that the con­struc­tion sec­tor seems to be one of the few at­trac­tive sec­tors for in­surance funds as the Chi­nese econ­omy slows down.

“In­vest­ment in the man­u­fac­tur­ing sec­tor has been slug­gish and high growth in the property sec­tor is un­likely to be sus­tain­able, leav­ing the con­struc­tion sec­tor the only rea­son­able op­tion when it comes to eq­ui­ties in­vest­ment by in­surance funds,” Lu said.

The stock price of CSCEC rose 1.44 per­cent to 9.18 yuan ($1.34) onWed­nes­day.

LEI KESI / FOR CHINA DAILY

Visi­tors line up to get more in­for­ma­tion about a health in­surance pol­icy of­fered by An­bang In­surance Group at an in­ter­na­tional fi­nance expo in Bei­jing.

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