[ET Net News Agency, 16 January 2020] Goldman Sachs reinstated coverage on Guangzhou
R&F Properties (02777) with a target price of HK$16.1 and a "neutral" rating.
The research house factored in its latest industry assumptions into its estimates for
R&F. Its underlying EPS are RMB2.95/RMB3.31/RMB3.81/RMB4.19 over 2019-2022, suggesting a
13% CAGR.
Goldman said the shares are already trading at a lower-than-peers average cash earnings
multiple (4x 2020 versus peers of 5x), which reflects its high-risk, debt-driven growth.
However, with its first equity offering since listing being done around end-2019,
Goldman believes R&F's balance sheet is set to improve. It expects R&F's net gearing to
fall to 149% by end-2019 and without factoring any new acquisitions, this ratio can be
further reduced to 75% in 2020. (KL)