[ET Net News Agency, 4 November 2019] Citi Research initiated coverage on A-Living
Services (03319) with a "buy" rating and target price of HK$34.69.
It said A-Living will be the largest HK-listed property manager by the GFA scale (2020:
600msm) after the completed acquisition of CMIG PM (1Q 2020; pending EGM).
Citi said substantial fundamental improvements should trigger a re-rating: (1) Better
non-cyclicality: lower revenue contribution from developer services (2021: 19%; 2023: 15%
versus 1H 2019: 36%); (2) Transparent target for organic growth, with 60msm+/year new
contracted GFA from third party (40msm+) or parent company (20msm); and (3) All-round
presence in public & high-end commercial projects with higher entry barriers.
Together with the pick-up in community value-added services (VAS) at estimated 55-60%
profit CAGR from a low base, Citi forecast 42% EPS CAGR & ROE hitting 29% by 2021 (2018:
23%), with CMIG PM adding estimated 9%/14% earnings in 2020/21. (KL)