Citi Research lifted its target price for China Aoyuan (03883) to HK$13.86 from HK$12.8 and maintained its "buy" rating.
The research house said Aoyuan's 1H result is another proof of its growth trajectory (48%/30% EPS/sales CAGR to 2021), with improved visibility on Rmb139bn unbooked sales. M&A edge (72% of 1H land acquisition) enables cheap landbank cost of Rmb2.3k/sqm (22% of ASP)
and ensures stable GPM outlook (26-30% in the longer term).
Citi added that Aoyuan has ample Rmb220bn renewal pipeline of sizable well-located projects at high GPM (35-40%), mainly in the Greater Bay (especially Zhuhai). Management is confident to unlock Rmb70bn+ renewal projects in 2019, with the Zhuhai Cuiwei village likely in September and the rest in 4Q.
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