[ET Net News Agency, 22 December 2020] Citi Research lowered its target price for
Country Garden (02007) to HK$10.3 from HK$10.5 and maintained its "neutral" rating.
The research house sees Country Garden's focus on enhancing competitiveness (e.g., tech,
product, services) paved the way to a stable outlook. Its optimization on costs and
efficiency is on track with room to improve on SG&A and finance costs, which mitigated the
GPM pressure.
After an estimated RMB580bn+ sales (5%) in 2020, Citi estimated 7% sales growth in 2021
but moderation on earnings growth is inevitable on margins (22-24% unbooked GPM). The VC
(Venture Capital) investments on property value chains add value via vertical integration)
but its focus on nonproperty businesses (e.g., culinary robots; agriculture, etc.) could
drag its margin/ROE and hinder the market from fairly assessing its outlook. (KL)