[ET Net News Agency, 14 January 2021] CCB International Securities (CCBIS) cut its
target price for Sunac China Holdings (01918) to HK$47.5 from HK$51 and maintained its
"outperform" rating.
The research house said Sunac has been focusing on deleveraging and internal upgrades
since early 2020 by way of slowing down land banking, limiting investment or divestment in
some non-core businesses, improving cash collection, fine-tuning the financial structure,
strengthening the equity base, and implementing cost-saving measures on selling and
administrative expenses.
CCBIS expects a notable financial improvement to be reported in the 2020 results, most
notably a two-tier improvement from the "Red" category to the "Yellow" category under the
345 rule.
It expects Sunac's contracted sales growth will normalize at 10% in 2021 onwards,
considering its current scale and pace of land bank replenishment. CCBIS believes Sunac's
turnaround story in its financial position could trigger a re-rating on its valuation i.e.
3.8x 2021 P/E and 6.5% dividend yield. (KL)