- April 01, 2021
We reiterate our Buy Rating on Aoyuan Healthy Life (3662.HK) as we believe the stock will be re-rated on the back of the strong set of 2020 results. We believe the recent correction in Aoyuan Healthy Life’s share price is unwarranted. The current valuation of 9.4x 2021E P/E offers investors an attractive buying opportunity into a stock on track to deliver an earnings growth of over 50% YoY in 2021E, in our view.
Key Highlights:
- Fundamentals are intact with 2020 results in-line with our expectations and 2021E is on track to deliver another ~50% YoY net profit growth, in our view.
- We believe market has mainly been concerned with the company’s (1) heavily reliance on parent company; and (2) lack of track record in General Health and Wellness sector.
- However, we believe the acquisitions in 2020 have changed the company’s reliance on parent co. and 55% of GFA Under Management are now third-party projects, with a vibrant team actively seeking for third-party opportunities.
- General Health and Wellness expansion remains underway and such concerns will also be alleviated once a successful acquisition is completed.
- We reiterate our Buy Rating with our Target Price of HK$11.18/sh offering 103% upside potential.
