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2026-10-21 12:06:27 Goldman Sachs published a research report stating that the reform of the Mainland property market sales model will slow the ROE recovery of the entire sector. After analyzing inventory, city exposure and balance sheets, the broker believes companies with more sellable resources, longer land bank duration, higher exposure to top-tier cities, and lower leverage and debt repayment pressure, including CHINA OVERSEAS (00688.HK) and CHINA RES LAND (01109.HK), will be best positioned to adapt to the transition, while SEAZEN (01030.HK) and CHINA VANKE (02202.HK) face relatively higher operational risks. The broker said that under deleveraging constraints, the trend in average selling prices (ASP) has become a key driver of ROE and reinvestment scale. Goldman Sachs suggested that if property prices rise by about 20% or land prices fall by 25%, project net profit margins could improve to 20%, significantly accelerating corporate recovery. However, the likelihood of such a scenario is low due to weak housing demand and intense competition for attractive land parcels. Meanwhile, Mainland developers will face relatively high debt repayment pressure from 2027 to 2029, and private developers may be forced to clear old inventory, potentially offsetting the related positives. Goldman Sachs lowered its base profit forecasts for covered developers for 2026 to 2028 by an average of 2% to 27%, while target prices were revised from cuts of 24% to increases of 13%. Among them, the broker downgraded GREENTOWN CHINA (03900.HK) to "Neutral" and cut its TP to HKD7.2 due to its relatively weaker balance sheet, which may reduce visibility on ROE recovery. It maintained "Buy" ratings on CHINA OVERSEAS (00688.HK), CHINA RES LAND (01109.HK) and CHINA JINMAO (00817.HK), with TPs raised to HKD17.2 and HKD41 respectively for the first two, while the TP for CHINA JINMAO (00817.HK) was lowered to HKD1.7. The broker also maintained "Sell" ratings on SEAZEN (01030.HK) and CHINA VANKE (02202.HK), cutting their TPs to HKD1.22 and HKD2.2 respectively. Goldman Sachs also lowered the TP for LONGFOR GROUP (00960.HK) to HKD6.3 while maintaining a "Neutral" rating.(gc/da)~ AASTOCKS Financial News Website: www.aastocks.com 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. | |