- August 18, 2020
- Aoyuan’s solid 1H20 results (net profit up 21% YoY, 39% of full year earnings estimate achieved) should dispel investors’ concerns and drive the stock higher, in our view.
- We find the stock’s valuations of 3.7x 2020E P/E compelling, especially considering its 2020E 54% YoY earnings growth is already largely secured by unrecognized sales.
- Current valuations imply that the stock is offering an attractive 9.4% 2020E dividend yield
- We believe Aoyuan is on track to achieve its RMB132bn contracted sales target, with a 45.7% YTD July run-rate.
- We have also noted a higher contracted sales contributions from JV projects in 1H20. While this lowers the visibility of Aoyuan’s balance sheet leverage, their amount of JV & Associate projects still remains lower than the industry average, in our view.
- We reiterate our Buy rating with a target price of HK$14.46/sh (50% upside potential)
