[ET Net News Agency, 31 December 2020] HSBC Global Research initiated coverage on Sunac
Services (01516) with a "buy" rating and a target price of HK$22.3.
The research house said Sunac Services has a strong presence in major cities, where
management fees are higher, and is very profitable. Given the low base effect, Sunac
Services has one of the highest earnings growth rates in the sector - a CAGR of 151% in
2017-19 - and HSBC forecast a CAGR of 92% over 2019-22.
HSBC added that Sunac Services enjoys a high level of earnings visibility due to its
broad range of revenue streams, which include residential, culture & tourism, and its
latest M&A initiatives. Specifically, non-residential property management revenue rose
from 19% in 2017 to 28% in 1H 2020, and HSBC forecast 2019-22 CAGRs of 99% and 19% for
community value-added services (VAS) and VAS to non-property owners, respectively. (KL)