The first H+A-share company in the world is expected to start trading in Shanghai next week. And it’s bigger than anything else on the new venue.
A train passing the bridge. Image credit: Heather Maguire/Unsplash.
Scale matters. Hefty companies always attract more attention than their smaller peers. Giant players are often considered to be the bellwethers for the market as a whole. In this regard, who is the germinating SSE sci-tech board going to be associated with? Lights, camera, action: China Railway Signal & Communication (CRSC or 中国通号). With operating income of over CNY 40 billion (USD 5.8 billion), the firm is the absolute scale leader among those submitted their applications to list on the STAR market. Worth being stressed that CRSC’s 2018’ revenue amounts to almost 22% of all the 141 applicants’ (as of June 2019) total revenue pool in the same year.
China Railway Signal & Communication Corporation Limited is a global leading rail transportation control system solutions provider. Founded in 1953, it has been catching the waves on technological progress for several decades. Nowadays, its main business directions include system design and integration, equipment manufacturing, system implementation and construction contracting.
The industry-vertical structure is balanced, which means one of the two things: the firm provides a relatively stable (over time) group of clients with a whole gamut of services or it's just a coincidence. For the market long-livers like CRSC the first is more possible.
Equipment manufacturing is of the highest gross profit margin (42.6%) among the four businesses. This segment comprises manufacturing and sale of signal and communication systems products. Given the fact that it's the most capital-intensive direction here, the firm's position in the market looks pretty solid. By the way, the other three largest segments are also profitable: 34.7%, 12.2%, 13.2% for design and integration, system implementation, construction contracting respectively.
Besides the size, an important characteristic of CRSC is the existing relations with another marketplace (manufacturers of this scale, obviously, can’t feed on the private funding only): it is listed on the Hong Kong Stock Exchange (HK.03969). While HYC Technology is going to become an absolute champion in the sci-tech-board-pathbreaking discipline, the Beijing-based “railway supermarket” will take the “H+A crown", or, more precisely, will become the first company ever to have shares issued on HKEX and SSE at the same time. No wonder that the firm's behavior in Mainland China excites investors in Hong Kong.