[ET Net News Agency, 13 January 2020] Daiwa Research lifted its target price for China
Railway Group (CRG)(00390) to HK$5.5 from HK$5.3 and maintained its "outperform" rating.
The research house likes CRG, where it sees an undemanding valuation, likely solid
revenue and new order expansion over 2019-20E, and strong growth potential in overseas
markets.
In December 2019, CRG announced it would dispose of a 51% equity interest in its
wholly-owned subsidiary, CRCE, the toll road operator, along with CNY3.3bn in related
debt, for CNY9.9bn. Daiwa estimated CRG to record a CNY3.7bn disposal gain from the
transaction, representing 20% of the 2019 adjusted net profit.
It lowered its 2019 core EPS forecast by 1% but raised its 2020 core EPS estimate by 4%
to factor in the asset disposals that are likely to be completed in 2020 and its
investment in the Malaysian project. (KL)