Attention has turned to the Phoenix Towers in Wuhan, a transport nexus and industrial center as the buildings' proponents gave plans to the city last month. Two towers in the mixed-use commercial compound would soar to one kilometer (0.62 mile), compared with 2,717 feet for Dubai's Burj Kalifa, the world's top tower today.
Then in Changsha, the capital of Hunan Province south of Wuhan, conglomerate Broad Sustainable Building still plans to build its 2,750-foot-tall Sky City tower. It broke ground last year, though with little if any progress since then, Chinese media say.
Broad estimates the project will cost $626 million and take just nine months. Both goalposts are ominously low because the company would use prefabricated building techniques, the media say.
"Super-tall" office buildings are also set to sprout in the second-tier cities of Chongqing, Shenyang and Tianjin, CBRE says. It warns of the risk of oversupply, but for local officials in Asia, the image of a sky-high city is worth dozens of empty floors.
"There is a perception that a high density of tall buildings is synonymous with being a successful financial hub," the July 7 report says.
That means go ahead and build. Some towers will prosper on occupancy by financial and other service businesses if economic reforms steer China toward more reliance on consumption.
Reforms, however, may take longer than expected, says Qinwei Wang, China economist with Capital Economics in London.
"This means that net returns of some high buildings will perhaps be disappointed, especially for those supported by the state-owned firms with decisions largely based on benefiting local officials' career rather than reasonable evaluations of economic and social returns," Wang says.
At the time of publication, the author had no position in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.
TheStreet Ratings team rates HONEYWELL INTERNATIONAL INC as a Buy with a ratings score of A+. TheStreet Ratings Team has this to say about their recommendation:
"We rate HONEYWELL INTERNATIONAL INC (HON) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, good cash flow from operations, increase in stock price during the past year and growth in earnings per share. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- HON's revenue growth has slightly outpaced the industry average of 0.8%. Since the same quarter one year prior, revenues slightly increased by 5.8%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The current debt-to-equity ratio, 0.49, is low and is below the industry average, implying that there has been successful management of debt levels. Along with the favorable debt-to-equity ratio, the company maintains an adequate quick ratio of 1.04, which illustrates the ability to avoid short-term cash problems.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, unless broad bear market conditions prevail, we still see more upside potential for this stock, despite the fact that it has already risen over the past year.
- HONEYWELL INTERNATIONAL INC has improved earnings per share by 7.8% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, HONEYWELL INTERNATIONAL INC increased its bottom line by earning $4.92 versus $3.70 in the prior year. This year, the market expects an improvement in earnings ($5.55 versus $4.92).
- Net operating cash flow has slightly increased to $1,341.00 million or 6.76% when compared to the same quarter last year. The firm also exceeded the industry average cash flow growth rate of -24.85%.
- You can view the full analysis from the report here: HON Ratings Report