[ET Net News Agency, 20 December 2019] UBS Global Research estimated Guangzhou R&F
Properties' (02777) placement of 273m shares could result in 7% EPS dilution after
factoring in some interest savings. Pro-forma net gearing should drop to 204% from 219% as
of end-June 2019.
Despite the short-term EPS dilution, the research house thinks the placement helps with
the company's gearing in the long-term by enlarging its equity base, helping to alleviate
investors' concern on its high gearing.
UBS reiterated its "buy" rating on R&F as it sees a substantial hidden land bank from
its urban redevelopment projects. Its price target of HK$22 was based on a 4.4x target
2020 PE. (KL)