- September 02, 2021
We published a research report on LVGEM (95.HK) on the back of its recent interim results announcement. Please kindly see the full report attached.
Key Highlights:
Construction for Phase 1 of the Baishizhou Project is well under way, in our view, after obtaining the necessary permits in July. We believe it is on track to launch the project for pre-sales by end-2022E/early-2023E. Meanwhile, the developer continues to sell its healthy inventory of prime property assets in the Greater Bay Area.
- LVGEM’s Baishizhou Urban Renewal Project has been progressing well since it completed the contract signing for Phase 1 back in April, and with the developer obtaining the planning permit and construction permit in July, foundation works is now well under way.
- We believe the project is progressing according to plan and the project should begin pre-sales towards the end of 2022E and mostly in 2023E, in our view.
- We estimate such sales will be booked between 2023E-2024E, paving way for the start of a high-growth period for the developer.
- With the stock trading at 86% disc. to NAV, we maintain our Buy rating with the Target Price unchanged at HK$4.90/sh.
- We believe the conversion of the Mangrove Bay No.1 project to an investment property may result into a drag on LVGEM’s balance sheet, but we are not overly concerned given the scarcity nature of the project’s prime location. This asset will be able to be liquidated relatively easily should the developer require the liquidity any time.
