Jefferies Research initiated coverage on China Vanke (02202) with a "hold" rating and a price target of HK$30.91.
The research house likes Vanke's well-diversified businesses, but it believes Vanke's earnings visibility is the lowest among large caps given softening sales growth on limited land bank and shrinking margin on high land cost.
Jefferies expects Vanke's earnings growth to decelerate to low teens with development gross margin narrowing to <25% in two years. Vanke's current valuation looks fair (6.5x 12-month forward P/E).
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