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<Research> M Stanley Cuts Greentown China (03900.HK) TP to HKD7.15, Rates Underweight; Says Earnings Recovery to Be Prolonged
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Morgan Stanley recently published a research report stating that Greentown China (03900.HK)'s earnings recovery may take significantly longer than market expectations, mainly due to challenges in property sales and gross margins. Recent changes in the chief executive position may add uncertainty to short-term operations and finances. The broker maintained an Underweight rating. The bank noted that due to a decline in land reserves and a lower project equity ratio, equity contracted sales in 2026 are expected to fall by more than 20% YoY. Saleable resources decreased 19% YoY to RMB163 billion, while unrecognized sales dropped 25% YoY to RMB107 billion, putting considerable pressure on revenue in the coming years. Following management changes, the company may adopt a more prudent approach to land investments and could further reduce its land bank. M Stanley believes that although Greentown China made higher-than-expected asset impairment provisions in 2025, they may still be insufficient to cope with future pressures. Older projects may continue to face price-cutting pressure. The broker lowered its core profit forecasts for 2026 and 2027 by 12% and 11%, respectively, to reflect changes in the revenue recognition mix and weak sales. The TP was reduced from HKD7.86 to HKD7.15, implying an unchanged 40% discount to 2026 net asset value per share. The Underweight rating was maintained. (ec/w) This article was automatically translated by AI, the Chinese version should be considered the authoritative version. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. Auto-translated by AI AASTOCKS Financial News |
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