Citi Research initiated coverage on Poly Property Development (06049) with a "buy" rating and a target price of HK$75.
The research house said Poly Property Development is emerging as a core holding for investors and Citi's top-pick in China's property management sector, given (1) leading position as a national top-2 property manager (0.9% market share with upside) backed by a national top-5 developer (2% market share) and SOE parent group; (2) proven execution and market-oriented expansion via full-range of GFA channels (e.g. public); (3) long-term vision towards a mega-size platform for all-round services (e.g. education & healthcare ride on parent company biz) for sustainable growth; (4) potential share option in 2H 2020 to further align interests.
Citi also noted two imminent catalysts for further upside: (1) potential positive profit alert in February on estimated 55% 2019 earnings growth (Rmb530mn), and visible 48%+ profit CAGR to 2021 offers 15-20% upside to market expectation; (2) Likely Stock Connect inclusion in 1H 2020 to entice more investor interest.
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