BofA Global Research raised its target price for Agile Group Holdings (03383) to HK$14.4 from HK$11.6 and upgraded its rating to "buy" from "neutral".
The research house said the upgrade reflects Agile's rapid expansion in diversified businesses with potential spin-offs and listings (that can unlock value), and faster asset turn in development property in the future.
Given the introduction of 3-4-5 rules, BofA believes DP growth outlook for small caps could be capped by lower B/S expansion potential. Thus, it expects Agile's higher profit-contribution from fast-growing non-DP businesses (above 20% of gross profit) to stand out.
The potential diversified business spin-offs (e.g. landscaping and decoration, environmental protection) could (1) aid Agile's growth profile via improved funding for these new businesses, (2) help Agile deleverage, and (3) unlock partial value given higher valuation for these new businesses.
Overall, BofA lifted its 2021/22 EPS forecasts by 1%/6% and projected 12% EPS CAGR in 2019-22.
18/09/2020 17:01
{I-bank focus}BofA upgrades Agile Group (03383) to HK$14.4
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