[ET Net News Agency, 20 December 2019] Citi Research said Guangzhou R&F Properties'
(02777) share placement scale came smaller than its expected, at 7.8% of enlarged shares
versus 20% approved at EGM end-2018.
The research house believes this has removed the short-term share price overhang, given
90 days lock-up before further equity financing.
Citi also expects re-rating of R&F in the near term, based on (1) the real game-changer
is the improving 2020 sales outlook (est. +12%yoy) on upcoming conversion of two GZ urban
renewal projects (estimated Rmb5bn in December to 1Q, & total Rmb25bn+ saleable resources
in 2020); (2) near-term pressure on balance sheet & liquidity reduced by H-share issuance
& better cash collection in 2020; (3) compelling valuation post-placement dilution at 2.7x
2020 PE, 15% dividend yield and 59% discount to NAV.
Citi maintained its "buy" rating on R&F, with a target price of HK$18.6. (KL)
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02777 R&F PROPERTIES
Nominal 
0.890 +0.060 (+7.229%) Research Report
20/12/2019 15:44
{I-bank focus}Near-term re-rating seen for R&F Properties
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