[ET Net News Agency, 24 May 2018] Goldman Sachs kept its target price for Agile Group
Holdings (03383) at HK$18.9 unchanged, buy downgraded its rating to "neutral" from "buy"
following strong share price performance and fundamental concerns.
The research house said Agile was up 144% in the past 12 months versus MSCI China index
up 31%.
Goldman believes Agile is facing the following challenges in the coming years: (1) 54%
of its outstanding debt as of end-2017 is bank loans, and thus floating rates that will
likely be revised up amid possible rate hikes; (2) The company has expanded into 7 new
cities in 2017, increasing its exposure to 53 cities. Historically, Agile's execution
outside Southern China to be relatively slow/weak; (3) Hainan is recently designated as a
free trade zone by 2020. Although this is a long-term positive for Agile, the latest
tightening suggests the risk to sales forecast skews to the downside. (KL)