[ET Net News Agency, 28 November 2019] Nomura said Sunac China Holdings' (01918)
acquisition of a 51% stake in Times Global and Global Century from YMCI (Shanghai code:
600239) for CNY15.3bn would lower its net gearing by 5 ppt on a proforma basis (from 218%
in 1H), given the lower leverage of the acquired companies (net gearing at 92% in August).
With the prudent land acquisition in 2H, Sunac's net gearing is expected to drop to
130-140% by end-FY2019.
With potential sales contribution from the acquired companies of CNY40bn in FY2020,
Nomura believes Sunac is likely to record the fastest sales growth among the top 5
developers in FY2020. The research house expects its contracted sales to rise by 20%
(CNY660bn) in FY2020, outperforming the 5-10% growth for the top 3 developers.
Nomura estimated that the acquisitions would lift its NAV by 4% in FY2019 (considering
only existing land bank and assuming three years of development cycle) or 8% (adding the
potential land bank and assuming 10 years of development cycle).
It maintained its "buy" rating on Sunac, with a target price of HK$50. (KL)