Recommendation / Target Price
Everbright Securities Buy HK$16.47
CCBI Outperform HK$13.8
DBS Buy HK$12.51
BNP Paribas Buy HK$13.2
CMB International Buy (Initiation) HK$11.2
Guosheng Maintain Buy HK$14
Central China New Life has announced that its unaudited consolidated net profit attributable to shareholders for the year ended 31 December 2020 was expected to expand substantially by no less than 80% compared to the previous year’s level. It attributed the huge increase mainly to (1) the significant increase in gross floor area under management and revenue growth from value-added services of the property management and value-added services; (2) increased revenue from lifestyle services resulting from the significant increase in the number of registered users of the Group’s Jianye+ platform; and (3) the Group’s implementation of quality improvement and efficiency enhancement measures, resulting in the continuous decline of the management expense ratio. The strong performance has subsequently earned upbeat recommendations from different securities houses.
Everbright Securities: Benefits of deep penetration gradually unleashed; Issues “Buy” recommendation and raises target price to HKD16.47
Everbright Securities said in a research report that after Central China Real Estate’s expected successive delivery of projects, acquisition of new projects and expansion of existing projects, the density of its projects in Henan Province will further increase, and the benefits of its long-term deep penetration into the region will gradually materialize. As a result, it will enhance its cost control and rapid expansion capabilities, as well as the standard of its property management services. Moreover, the company’s Jianye+ platform will take full advantages of the concentration of its users in the region, and it will benefit from the multiplier effect and user coverage expansion. Everbright Securities has maintained its “Buy” rating and raised its target price for the Company from HK$14.62 to HK$16.47.
CCBI: Reiterates view that Central China New Life is top pick among property management companies; Maintains “Outperform” rating with target price of HKD13.8
CCBI said in a research report that as of Dec 2020, non-residential properties accounted for 41% of Central China New Life’s managed GFA, up from 30% in 2019, showcasing the management’s efforts to diversify the company’s management portfolio. CCBI expects Central China New Life’s contracted GFA and managed GFA to grow by 40-50% in 2021, and it forecast the CAGR of the company’s net profit to reach 53% in 2020-2022. CCBI has reiterated its view that Central China New Life is its top pick among property management companies, and it has maintained its “Outperform” rating on the Company with a target price of HKD13.8.
DBS: Maintains “Buy” rating with target price of HK$12.51; Undervalued high-growth stock
According to a DBS research report, Central China New Life has a well-established Jianye+ platform that is already operating under a well-proven membership model. It is well-positioned for future community monetization. As of the end of December 2020, the Company’s contracted and managed GFA reached guidance of 186 million sq.m. and 100 million sq.m., respectively. Thanks to its regional focus in Henan, Central China New Life has the highest project density among its peers and it has ample room to enjoy gains in operational efficiency. DBS has raised its forecast FY2020-2022 earnings for Central China New Life by 5%-8% and maintained its “Buy” rating with a target price of HK$12.51.
BNP: Strong growth likely over next three years; Maintains “Buy” rating with target price of HK$13.2
BNP said in a research report that Central China New Life has issued a positive profit alert and has maintained strong growth across all segments. Central China Real Estate’s delivery of projects and the new property management contracts awarded by third-party developers will drive the company’s strong revenue growth over the next three years. In addition, the company’s Jianye+ one-stop online-to-offline platform for products and services offers huge potential to scale up the number of its users. The platform will serve as the principal driver of its lifestyle services segment. BNP considers Central China New Life’s current share price as undervalued and it has maintained its “Buy” rating for the company with a target price of HK$13.2.
CMBI: Initiated a “Buy” rating on Central China New Life with target price at HK$11.2 on its prominent regional leadership
CMBI said that Central China New Life has established strong leadership in Henan. Its rapid growth can compensate for its lower property management fees as a regional property management company. As of December 2020, Central China New Life’s reserved GFA stood at 87% of its total GFA under management, clearly demonstrating its highly visible expansion track. CMBI expects the company’s total GFA under management to achieve a CAGR of 52% between 2019 and 2022. Its merger and acquisition activities in Henan will drive its growth further. CMBI considers that the company’s regional leadership is currently underestimated and has initiated a “Buy” rating on the company with a target price of HK$11.2.
Guosheng Securities: Maintains “Buy” rating on Central China New Life and raises target price to HK$14 as it accelerates business layout establishment beyond the province
Guosheng Securities said in a research report that Central China New Life acquired 51.0% of Taihua Jinye for a consideration of RMB100 million at the end of last year. The acquisition not only solidifies further the company’s business layout beyond the province, but it will also continue enhancing its project density in Hebei. In 2020, new registered users of the Jianye + platform rose 30.3% year-on-year to 1.49 million. The annual GMV was RMB780 million, an 83.9% spike year-on-year. With the continuous expansion of the company’s user coverage, GMV of the Jianye + platform is expected to maintain its rapid growth going forward. Guosheng Securities has maintained its “Buy” rating for the company and raised its target price from HK10 to HK$14 (based on 25x PE in 2021(E)).
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