Operating Margin - China Communications Services Corp Ltd (HKEX:552)

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Price: 4.58 HKD -1.29%

Market Cap: 31.7B HKD

2.1%

Current

Average

5.2%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

2.1%

Operating Profit

3.3B

Revenue

152.5B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
CN		China Communications Services Corp Ltd HKEX:552	32.1B HKD	2%
FR		Vinci SA PAR:DG	69.6B EUR	12%
US		Quanta Services Inc NYSE:PWR	65.1B USD	6%
IN		Larsen & Toubro Ltd NSE:LT	5.7T INR	9%
IN		Larsen and Toubro Ltd F:LTO	51.9B EUR	9%
NL		Ferrovial SE AEX:FER	41.6B EUR	10%
ES		Ferrovial SA MAD:FER	41.6B EUR	10%
US		Comfort Systems USA Inc NYSE:FIX	36.5B USD	13%
DE	H	Hochtief AG XETRA:HOT	27.8B EUR	4%
CN	C	China State Construction Engineering Corp Ltd SSE:601668	214B CNY	4%
US		EMCOR Group Inc NYSE:EME	29.1B USD	9%

China Communications Services Corp Ltd
Glance View

Market Cap

31.7B HKD

Industry

Construction

China Communications Services Corporation Limited (CCS) operates as a vital cog in China’s extensive infrastructure landscape, particularly centering around the telecommunications sector. Established in 2006, CCS was spun off from China Telecom to provide comprehensive services that span across a spectrum of communications-related activities. The entity stands out by integrating its solutions into construction projects, such as telecommunications and information technology infrastructures, while also handling network equipment supplies, maintenance, and operations. With its fingers on the pulse of an ever-evolving technological landscape, CCS emerges as a significant enabler of digital connectivity, weaving networks that link urban, suburban, and rural China alike. Financially, CCS capitalizes on a diversified service portfolio that leverages the massive demand for telecommunications infrastructure against the backdrop of China's rapid digital transformation. The company earns its revenue through three primary segments: telecommunications infrastructure services, business process outsourcing services, and applications, content, and other services. By engaging in design, construction, and project supervision, CCS secures substantial contracts with major telecommunications operators, including its parent company China Telecom, along with China Mobile and China Unicom. Beyond its traditional markets, the firm also taps into burgeoning areas such as cloud computing and artificial intelligence services, opening new revenue streams. As China pushes towards greater digitization, CCS finds itself in a promising position to ride the wave of digital and infrastructural advancements, expanding its market influence and revenue sources further.

View China Communications Services Corp Ltd Analysis

Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

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China Communications Services Corp Ltd
HKEX:552