JPMorgan Chase recently released a research report, giving Evergrande Property (06666) an "outperform" rating with a target price of HK $13. JPMorgan Chase believes that Evergrande Property is one of the top three property management companies in China, supported by Evergrande Group (03333; Supported by the top three developers in China's sales), it is given an outperform rating with a target price of HK $13, which is equivalent to 25 times the 12-month estimated P/E, which is a significant discount to other peers with large market capitalization (> 45 times P/E).
JPMorgan Chase believes that the recent stock price correction is a good buying opportunity, because once the negative news subsides, there will be a strong rebound. The driving force mainly comes from three aspects: First, there is an opportunity to release a profit announcement for the first half of 2021 in July, JPMorgan Chase predicts a 55% year-on-year earnings growth; Second, the August performance may have good news about the newly added area under management; Third, there may be benefits from mergers and acquisitions.
JPMorgan Chase predicts that Evergrande Property's core net profit will grow at a compound annual growth rate of 42% from 2020 to 2023, making it the top three property management companies in China, and its market share will increase from 0.9% in 2020 to 2.6% in 2023. The company's advantages in third-party expansion (bidding and mergers and acquisitions) come from national brand recognition, focus on third-and fourth-tier cities with less competition (58% coverage), strong network (some third-party contracts can be obtained from suppliers), and sufficient net cash of 11 billion yuan.
Comments