[ET Net News Agency, 5 November 2019] J.P. Morgan initiated coverage on Logan Property
(03380) with a "neutral" rating and a target price of HK$13.
The research house likes Logan's Greater Bay Area-focused land bank (>70%), but JPM
thinks its unique edge on the high-margin projects (Logan City & Shenzhen) is fading as
they are getting depleted.
By looking at the latest land acquisitions, the development margin should revert to the
industry average of 25-30% (versus >35% in 2017 & 2018). Although this can be offset by
the high-margin primary land development segment, the discount should be applied for its
lack of certainty, JPM noted.
Trading at 5.2x 2020 P/E, JPM said the market has already priced in its high net margin
(>14% versus peers' average of 10-11%) until 2021 and solid earnings growth (27% CAGR in
2018-21).
JPM said it could turn more positive if there is a longer track record of earnings
sustainability in primary land development, and easing in Shenzhen. (KL)
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Super Quote | Detail Quote | Interactive Chart | Transaction | Related News | Related Securities | Company Information | Dividend Records | Short Sell
03380 LOGAN GROUP
Nominal 
0.500 -0.020 (-3.846%) Others
05/11/2019 17:29
{I-bank focus}JPM starts Logan Property (03380) at HK$13
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