[ET Net News Agency, 12 June 2020] Nomura lifted its target price for China Evergrande
Group (03333) to HK$18.1 from HK$14 and maintained its "neutral" rating.
The research house noted that Evergrande management projected a strong 33% growth in
contracted sales in FY2020 and net gearing falling to 30% by FY2022 (159% in FY2019).
Nomura thinks this projection is optimistic. It sees limited scope for improvement in
the company's asset turn in lower-tier cities (65% of landbank). Nomura believes such
growth is unlikely without further price cuts/ sales promotions, which make for an
uncertain margin outlook. It estimates an EPS CAGR of 28% over FY2020-21 on a low base in
FY2019. (KL)