[ET Net News Agency, 6 December 2019] Daiwa Research raised its target price for
A-Living Services (03319) to HK$29.8 from HK$26.05 and maintained its "buy" rating.
The research house attended A-Living's reverse roadshow in Shanghai last week and
visited the public building projects managed by CMIG (an acquisition in September).
Daiwa noted that the entry barrier is high as expertise and experience are required to
manage high-profile projects. In addition, the management contract renewal and management
fee collection rates for public projects are high as many of the projects belong to a
single owner. It noted that the gross margins for some types of public buildings, such as
cultural facilities and commercial buildings, are decent (at >20%) and that management
fees can generally be raised upon contract renewal, implying potential upside in margins.
(KL)