[ET Net News Agency, 17 July 2018] Credit Suisse lifted its target price for China
Resources Land (CRL)(01109) to HK$36.5 from HK$34.2, and reiterated its "outperform"
rating.
The research house switched its large-cap top pick from China Overseas Land & Investment
(COLI)(00688) to CRL given the latter's stronger interim results, higher exposure to
quality IPs, and less vulnerability to RMB depreciation risk.
Credit Suisse estimated CRL's 1H profit to grow 90% YoY to HK$6bn, representing 25% of
Credit Suisse's FY2018 full-year estimate. The gross profit margin is to stay resilient at
over 40% (versus 35% in 1H 2017 or 40% in FY2017). Net gearing is to rise a bit with more
proactive land acquisitions but should remain well below its non-SOE peers.
It believes CRL is likely to beat its sales target of Rmb183bn after the strong run in
1H, which should bode well for its profit CAGR estimate of 20% over FY2017-20. Meanwhile,
its quality IP portfolio continued to deliver satisfactory results, with 1H rental income
up 26.5% YoY, or +14.3% YoY for SSS rental income. (KL)