[ET Net News Agency, 24 May 2018] Goldman Sachs initiated coverage on Future Land
Development Holdings (01030) with a "buy" rating and a target price of HK$9.5.
The research house said Future Land is embarking on a fast transition from a Yangtze
River Delta Tier 2/3-city focused developer of residential complexes and shopping malls,
into a national player, setting its sights on the Top-10.
Goldman expects it will deliver 50% yoy growth in presales this year, and believes its
current valuation does not reflect three potentials: (1) large-scale land bank (Rmb800bn+
in saleable resources); (2) competitive land cost (24% of ASP); and (3) standardized
products and operations.
Goldman believes Future Land is in the early stages of a multi-year earnings breakout
with a 2018-20 underlying profit CAGR of 42%, and it expects the stock to continue to
rerate to 6x 2018 cash-profit P/E from 3.7x now, given superior ROE (over 30% versus peers
18%). (KL)