[ET Net News Agency, 6 January 2021] Goldman Sachs initiated coverage on Sunac Services
Holdings (SUS) (01516) with a "buy" rating and a target price of HK$25.
The research house views SUS as a strong challenger entering the China property
management space, offering compelling scale growth and monetization potential (45% 2021-23
EPS CAGR versus property management coverage of 32%) on the back of parent Sunac China's
(01918) reshaped focus on SUS's profitable growth.
Goldman believes SUS's portfolio represents significant enhancement potential (third
party [3P] expansion started within the past year, community VAS was initiated in October
and it has peer-lagging margins) based on (1) managed GFA to triple from end-2020 to reach
442mn sqm by end-2023; (2) 1-2ppt GPM expansion and 1-2ppt p.a. SG&A ratio reduction
potential by 2023 versus 2019 levels; (3) community VAS revenue is expected to grow 120%
p.a. in 2020-23 and contribute 12% of the topline by 2023 from 4% in 2020; and (4) its
generous share incentives (15% of the share base) to drive long-term growth and
operational excellence. (KL)