- August 31, 2020
Key highlights:
- We believe CCNL’s geographical focus in a single province (Henan) will offer them a competitive edge to outpace its peers in long term growth through Lifestyle and Value Added Services.
- CCNL’s GFA Under Management has grown 68% YoY to reach 70.1m sqm, slightly ahead of our expectations, which is the largest single province community among its HK-listed peers.
- We raise our 2020E-2022E net profit by 4-5% and Target Price by 4% to HK$13.56/sh on the back of a stronger than expected 1H20 results.
- We believe the stock is currently trading at attractive valuations of 28.1x 2020E P/E, compared to the industry average of 34x 2020E P/E.
- Considering the strong growth potential and higher market ceiling from the Lifestyle and Value-added services, we believe the stock should trade at a premium to the industry average.
- Following the company’s recent IPO in May 2020, the company has now built up a warchest of RMB2.7bn cash balance which can be utilized to drive its earnings growth further.
