Thanks for the info about MHK. China is also still building sub-standard dwellings so renovations and reconsructions will occur with higher frequency than in developed countries. That's bodes well for China Ceramics because I don't think you can reuse tiles very easily due to the adhesiveness of the plaster on the backside of the tile. The company is also at max capacity even with the new facility(existing production lines) and are expecting 30% growth, so a 25% reduction in business means they will still grow 5%/year. So I agree a PE of 3(coupled with the growth rate) gives a huge margin of safety in my opinion. Others will obviously disagree.
Flimsy new buildings have little appeal
(China Daily)
Updated: 2010-04-12 08:21
Problems with construction quality of buildings are a more critical issue for Beijing's real estate market than high prices.
"China builds the largest number of new buildings every year, but they will only stand for 25 to 30 years," Qiu Baoxing, vice-minister of Housing and Urban-rural Development Administration, said at a recent international forum on green and energy-efficient buildings.
The growth in China's real estate market has not been accompanied by an increase in quality. There are more quality problems now than 20 or 30 years ago, he said.
Guo Fan bought a brand-new apartment in Changping district in 2003 with her husband before they got married. But only six years after moving in, the 30-year-old young professional is considering selling.
"We found some cracks in the living room walls the second year we moved in, and the sound insulation is very bad," she said.
During the rainy season Guo and her husband have to put newspapers and old clothes on their floor to absorb the rainwater.
"We call the real estate company every year to fix the problems, but they never have a once-and-for-all solution," Guo said.
"They told us that these are not big quality problems, but we don't want to wait until the building falls apart," she added.
As the house price has almost tripled in the past six years, Guo said it is a good time to sell and then buy another second-hand apartment which is older but with a better quality.
Guo used to live with her parents in Fengtai district in a two-bedroom apartment, which was built by Guo's father's company in the late 1980s, under the welfare-oriented housing distribution system.
"My parent's apartment was built almost 30 years ago. It looks a little dark and dirty now, but there are fewer cracks in the walls, and it never leaks. What a shame that we spent so much money on such a low quality property," she said.
Zhao Yanrong
-Adam
"Impatience is the companion of the doubting mind" Unknown
