Jefferies Research lifted its target price for Country Garden Services Holdings (06098) to HK$86.68 from HK$78.33 and maintained its "buy" rating.
CG Services entered into an MOU to acquire a 64.6% stake of Sichuan Languang Justbon (02606) at 9.9x forward P/E. Besides the 10-13% EPS enhancement, the research house believes the company would benefit from synergies on its scale/ geographical exposure/ margin/ community VAS expansion.
Considering the large deal size and bargain pricing, Jefferies believes the market would react very positively to the transaction. It revised up its FY2021-22 GFA and earnings forecasts to 636mn/785mn sqm and RMB4.2bn/RMB5.7bn (implying 50% CAGR).
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