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G Sachs: Tier-1 City Home Prices Encouraging; CHINA OVERSEAS (00688.HK) and CHINA RES LAND (01109.HK) Cash Earnings Expected to Rise 30-50%
G Sachs said in a report that in previous real estate cycles, the equity market has consistently acted as a leading indicator. Currently, home prices in Chinas tier-1 cities have ...
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G Sachs: Tier-1 City Home Prices Encouraging; CHINA OVERSEAS (00688.HK) and CHINA RES LAND (01109.HK) Cash Earnings Expected to Rise 30-50%
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G Sachs said in a report that in previous real estate cycles, the equity market has consistently acted as a leading indicator. Currently, home prices in Chinas tier-1 cities have shown encouraging signs of stabilisation. Since end-Mar 2026, share prices of the mainland developers under its coverage have risen by an average of 6%, while better-performing state-owned developers have gained 17% on average. Among them, CHINA OVERSEAS (00688.HK)  +0.420 (+2.689%)    Short selling $163.90M; Ratio 24.775%   and CHINA RES LAND (01109.HK)  +1.100 (+3.114%)    Short selling $433.32M; Ratio 36.496%   have each surged by about 30%.

The report noted that the current rebound suggests the market may have started to price in a broader recovery than its base-case scenario, with Shanghai and Shenzhen leading the current turning point. To assess whether current valuations are justified under more optimistic market expectations, the bank applied its four-pillar recovery framework, evaluating demographics, income, affordability and supply conditions across tier-1 and tier-2 cities.

Related News CICC: Bullish on CN Home Sector on Improving Fundamentals and Policy Tailwinds
Beyond Shanghai and Shenzhen, the bank selected 15 cities to form a leading cities cluster. Its analysis shows that if home prices in these 15 cities reach an inflection pointachieving by end-2028 the 15% increase projected for Shanghai and Shenzhen under its optimistic scenarioand taking CHINA OVERSEAS and CHINA RES LAND, which have outperformed in this rebound, as examples: CHINA OVERSEAS, primarily focused on property development with over 80% of its saleable resources exposed to leading cities, would be the biggest beneficiary in terms of contracted sales growth. In addition to benefiting from a recovery in property development, CHINA RES LAND may also see improved mall performance and rental income driven by the wealth effect from rising home prices.

Under the optimistic scenario analysis, by 2028, the two companies cash earnings are projected to increase by more than 30% and 50%, respectively, compared with 2026 estimates. For TP on mainland developers, please refer to a separate table. (ha/u)(HK stocks quote is delayed for at least 15 mins.Short Selling Data as at 2026-06-01 16:25.)

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