[ET Net News Agency, 15 April 2020] Jinke Property Group (Shenzhen code: 000656) said
Sunac China Holdings (01918) has sold an 11% stake in Jinke at CNY8/share. After the
disposal, Sunac will own an 18.35% stake (980mn shares) in Jinke.
Nomura estimated the disposal could contribute CNY800mn in profit in 2Q (3% of FY2019
core profit). If Sunac further disposes of its remaining 18.35% stake, it could
potentially contribute CNY2bn profit in total (7% of FY2019 core profit).
The research house believes Sunac is fulfilling its commitment of deleveraging in FY2020
(with management's target of net gearing of 150% by year-end versus 172% in FY2019) by
disposing of non-core assets (e.g., the Jinke stake) and increasing asset turnover.
Following Nomura's discussion with management, after factoring in slower GFA delivery
and lower-than-expected GPM (22-23% versus FY2019 25%), Nomura estimated FY2020 core net
profit to increase modestly at 10% (+15% if the Jinke stake fully unloaded).
Nomura maintained its "buy" call on Sunac, with an unchanged target price of HK$54. (KL)