[ET Net News Agency, 24 April 2018] Morgan Stanley trimmed its target price for China
Overseas Land & Investment (COLI)(00688) to HK$31 from HK$36, and reiterated its
"overweight" rating.
The research house likes COLI's low leverage and its acceleration of contract sales in
2018. COLI's net debt to equity is 27%, the lowest among all the listed developers,
providing room to leverage up its balance sheet for further growth without the need for an
equity placement.
In 2018, its contract sales target is 25% vs 10% actual growth in 2017. Morgan sees
upside for contract sales in 2018 as we expect its saleable resources to climb 58%.
Morgan forecast 18% core earnings CAGR in 2018-20 and lowered its 2018-19 EPS by 11% and
4%, respectively, implying gross margin at 33% and net margin at 20%. It also forecast
contracted sales growth of 15-25% YoY in 2018-20. (KL)