AMTD Research | Central China Real Estate (832.HK): Post Spin-Off Trading offers Buying Opportunity

We published a report to reiterate our Buy Rating on CCRE (832.HK) following the ex-Div of the company’s CCMGT Spin-Off.  We believe market is in the process of unlocking the deep value in CCRE through the post spin-off trading, offering investors a buying opportunity.  Our post spin-off Target Price of CCRE is at HK$3.85/sh, offering 68% upside.

Key Highlights

• The spin-off has attracted market’s attention on the stock, in our view, as it is trading at only 2.2x FY2021E P/E post spin-off.
• We believe the stock will trade back up towards a normalized 4.0x FY2021E P/E.
• Based on this as our Target P/E valuation multiple, our new Target Price is valued at HK$3.85/sh (from HK$6.1/sh), offering 68% upside from current levels.
• Our new FY2021E core net profit is at RMB2,407m (from RMB3,508m), after adjusting for the profit contributions from CCMGT and a lower GP Margins than original expected in its unrecognized sales.