HSBC Global Research lifted its target price for Greentown Service (02869) to HK$9 from HK$8.2 and maintained its "buy" rating.
The research house continues to like Greentown's premium branding strategy that taps into China's strong demand for quality living. The company has a strong track record in building out its VAS which now accounts for 59% of gross profit, versus 40% of peers.
HSBC thinks Greentown's concerted investment in VAS will pay off in the medium term, including its early education service. Its 1H, earnings growth was partly affected by its equity-settled share-based payment expenses. HSBC anticipated its earnings growth to be back on track in FY2020 and the research house forecast a decent 30% earnings CAGR in FY2018-21.
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