- April 09, 2021
We maintain our Buy Rating on CCRE, as we believe the stock remains undervalued, with the stock offering 10.5% div yield. We believe the completion of the spin-off of Central China Management Company will be a positive catalyst to the stock.
Key Highlights:
- We believe CCRE has been trading at depressed valuations amid long standing concerns with its geographical concentration in Henan Province.
- We believe the stock is undervalued, which can be seen through its 2.4x 2021E P/E and thus offering a 10.5% div yield despite achieving a 28.7% YoY growth in its 2020 core net profit.
- While we see downside risks to our 2021E-2022E earnings estimates amid the lower than expected GP Margins, we nonetheless believe the stock’s deep valuation is still unwarranted as the dividend declared reflects the developers’ cash flow earnings.
- Completion of the announced spin-off of Central China Management Company will be a key catalyst to re-rate the stock, in our view.
