[ET Net News Agency, 12 June 2020] Nomura lowered its target price for China Vanke
(02202) to HK$30.1 from HK$34.3 and maintained its "neutral" rating.
Despite a high base (ranked #2 in terms of contracted sales scale in 2019, at CNY631bn),
Vanke can grow its contracted sales at a 5% CAGR in 2020-21 (to CNY695bn in 2021) on the
back of its high-quality landbank (63% in tier 1 and core districts in tier 2 cities),
robust balance sheet (to adopt countercyclical investment) and proven execution, said the
research house.
Nomura thinks Vanke's current valuation has fully reflected this premium, and the growth
deceleration (EPS/contracted sales) justifies the lower valuation versus its trading
history.
That said, Nomura sees upside risk from a potential spin-off of its property management
subsidiary, which could be worth 20% of its current market cap, given its #1 position in
the industry (in terms of area under management). (KL)