[ET Net News Agency, 18 December 2019] Morgan Stanley initiated coverage on China
Jinmao Holdings (00817) with an "overweight" rating and a target price of HK$7.1.
The research house likes Jinmao for its (1) distinctive edge in city operations
business, (2) robust contract sales growth to over Rmb200bn in 2020, and (3) SOE
mixed-ownership reform, which should improve incentives and operational efficiency.
Morgan said Jinmao had 16 city operation projects as of August 2019, both primary and
secondary development. Its large and low-cost potential landbank from city operations
differentiates Jinmao from its peers. Management believes city operations will become a
major source of land acquisition, and aims for it to contribute 60% of newly acquired GFA
by 2022 (vs 40% in 1H).
In addition to current total saleable resources of Rmb1.2trn, the company has Rmb600bn
of saleable resources from city operations in the pipeline, for which it has signed
agreements with local governments but has not yet acquired the land, implying 50% upside
to current saleable resources. (KL)