- April 09, 2021
We maintain our Buy rating on Redsun Properties, as we believe that the company will continue to maintain its steady growth while valuations remain undemanding at 3.9x 2021E P/E. The developer has successfully deleveraged its balance sheet to meet all Three Red-Lines, which we believe is positive for its funding cost and channels.
Key Highlights
- We believe Redsun Properties is continuing on a steady growth trajectory in spite of a challenging environment.
- Under the three red-lines regulatory environment, Redsun has achieved green lights for all three categories, which we believe will smoothen the company’s financing channels for growth.
- However, the sharp rise in non-controlling interests on balance sheet implies that shareholders’ attributable stake in projects, and thus future shareholders’ profit will be diluted, in our view. We believe this may result in downside risks to our 2021E-2022E earnings estimates as a result.
- Nonetheless, we believe the stock’s valuation of 3.9x 2021E P/E implies that market’s growth expectations for the stock are also relatively low. We thus believe the slower growth is already factored in the price.
