- November 11, 2020
We have published a research report on Central China Real Estate (832.HK) on the back of the announcement of its spin-off plan for Central China Management Company (CCMC). We reiterate our Buy Rating with a HK$6.10/sh Target Price. Our full report is attached.
- We believe the Central China Management Company spin-off will unlock HK$7.5bn in valuation, accounting for 64% of CCRE’s current market cap.
- Greentown Management (9979.HK, NR) is now trading at 15.2x 2019 P/E and we expect CCMC will be traded at a similar P/E Multiple, implying the valuation of CCMC will be at ~HK$11.5bn.
- We maintain our Target Price of HK$6.10, as our fair value estimate has largely factored in the market value of its asset-light business.
- CCRE intends to payout a special interim dividend by way of a distribution in specie and the qualifying CCRE shareholders will be entitled to one share of CCMC for one CCRE share.
- The spin-off will not involve any offering of shares and no new proceeds will be raised.
