- August 23, 2021
We published a research report on Central China Real Estate (832.HK) on the back of its recent interim results announcement. Please kindly see the full report attached.
Key Highlights:
We believe that the stock is undervalued amid market’s concerns regarding its position vis-à-vis other listed entities within the CCRE Group. We believe that CCRE’s role will continue to be the core bread and butter of the development of all listed business units. Reiterate Buy.
- CCRE’s 1H21 DPS of RMB0.12/sh implies an interim dividend yield of 7.7%, and its 2021E full year div yield could reach 20.3%. We believe this underscores that the stock is undervalued.
- CCRE announced its 1H21 results, with revenue growing 56% YoY to RMB20.4bn while we estimate core net profit decreased 14% YoY to RMB677mn, representing 28% of our full-year estimate.
- The drop in the core net profit is due to higher than expected profit sharing to minority interests (~29% of Total Net Profit vs our estimate of ~14%).
- We believe the depressed valuations reflect that market is concerned about management’s commitment to CCRE relative to other listed entities of CCRE Group, but we believe that CCRE remains at the heart of Central China’s brand value and access to resources.
- CCRE revised down its full-year contracted sales target to RMB70bn (from RMB80bn); we believe it will be able to meet this target given their ~RMB68.8bn saleable resources in 2H21, implying a required sell-through rate of 57%.
