CCB International Securities (CMBIS) initiated coverage on Leading Holdings Group (06999) with an "outperform" rating and a target price of HK$8.
The research house said Leading is a Sichuan-based property developer with a nationwide presence. In 2020, the company ranked 72nd in terms of comprehensive capabilities.
As of September 2020, Leading had 107 projects including 18 JV and associate projects amounting to a total GFA of 16.6m sqm, of which 65% was located in Sichuan and Chongqing. Leading accumulated a huge landbank in 2017-2019, sufficient for 3-years of contracted sales based on CMBIS's estimates.
CMBIS expects Leading to slow down land banking in 2020-22 and instead reinvest 35% of its cash from contracted sales into landbank, which will bring net gearing to the 72.8-90.4% range in 2020-22. It expects Leading to achieve attributable core profit CAGR of 70% in 2020-22 to end 2022 with RMB2bn.
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