Equity Research | (3662.HK) Aoyuan Healthy Life Group: Post-Acquisition Integration to be 2H20 Key Catalyst

Aoyuan Healthy Life’s 1H20 results are in-line with our expectations, with 41% of our 2020E net profit achieved
We believe the key potential catalyst to Aoyuan Healthy Life’s (Aoyuan HL) 2H20 outlook will be on management’s execution to increase EasyLife’s profitability post-acquisition.
We have only factored in a 17% GPM for EasyLife in our earnings forecasts, compared to the 40.1% GPM achieved by Aoyuan HealthyLife in 1H20.
Aoyuan Healthy Life announced the acquisitions of EasyLife and Ningbo Hongjian during 1H20, adding 25.7m sqm of GFA under management, which we believe transforms the investment profile of Aoyuan Healthy Life and deserves a re-rating.
Reiterate Buy with our Target Price of HK$11.18/sh offering 43% upside potential.

Previous ProjectEquity Research | (2013.HK) Weimob: Solid execution amidst headwinds, expect further upside from econ recovery, raising PT to HK$13.7
Next ProjectEquity Research | (3883.HK) China Aoyuan Group: Solid 1H20 Results Despite Unprecedented Challenges