China Communications Construction, the country's top builder of highways and ports, posted a lower-than-expected 18 percent rise in second-half earnings despite improved margins on lower raw-material prices.
But the company, which competes with China Railway Construction and China Railway Group, is expected to benefit from a central government stimulus package that significantly boosts spending on infrastructure construction.
China's investment in fixed assets for transportation and communication this year was likely to reach one 1 trillion yuan ($146 billion) and planned investment for railway construction was 600 billion yuan, the company said in a statement.
"As the leading communication construction enterprise in China, the group is well positioned to benefit from the economic stimulus plan," it said.
China Communications said the value of new contracts totalled 283 billion yuan in 2008, up 20.8 percent, with a backlog of 334.3 billion yuan at the end of 2008, up 40.3 percent.
But the company's port construction and port machinery manufacturing were likely to be affected by the tough business environment, analysts said.
China Communications, which competes with China Railway Construction and China Railway Group, reported a net profit of 3.88 billion yuan for the six months ended December 2008 against 3.29 billion yuan in the same period a year earlier.
Full-year net profit edged up 0.7 percent to 6.08 billion yuan in 2008 with earnings per share unchanged at 0.41 yuan, the company said in a statement.
The operating profit margin recovered in the second half of 2008, lifting the full-year margin to 6.6 percent, from 5.5 percent in the first half of 2008 and against 7.0 percent in 2007.
"The company is expected to see higher margins in 2009," said Geoffrey Cheng, an analyst at Daiwa Institute of Research.
He said the company's 2008 net profit was in line with his estimation of 6.077 billion yuan.
The stock underperformed the broader market and has lost 0.8 percent since the beginning of 2009 despite an 8.3 percent rise in the blue-chip Hang Seng Index and an advance by the index for major Chinese mainland companies listed in Hong Kong, or H-share index, of 17 percent so far this year.
But China Communications shares fell 28 percent in the second half of 2008, better than a 35 percent drop on of the Hang Seng Index and a 34 percent fall by the H-share index.