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<Research>Citi: CN Home Sector Forming Soft Landing, but Time Needed to Digest; Top Picks CR LAND/ BEKE/ GREENTOWN MGMT/ COLI
Recommend 10 Positive 18 Negative 10 |
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Citi Research suggested in a report that a soft landing is brewing in China's property market, and that the industry's health is improving and stabilising, but that it will take at least two years to digest inventories. According to the broker, mainland property stocks have risen sharply in the past two weeks on the back of expectations for property policy easing, stabilisation of the property sector and capital flows. The broker's positive view of the sector in March was based on overly pessimistic market conditions, which provided a better risk-reward profile for buying beaten-down stocks with quality and stable fundamentals, as well as policy support. Citi currently recommended a Neutral trade approach for Chinese property stocks at current levels until risk-reward adjustments happen, as new home sales have only narrowed their decline and have not returned to growth. The broker believed a sustainable rebound must be supported by supportive policies, sales growth, stable housing prices, improved corporate margins, earnings growth and stable dividends. However, property booking margins are only expected to improve from next year onwards. Citi identified that investor participation in domestic property stocks is still low, and any price adjustment could provide an opportunity to buy beaten-down quality stocks at attractive valuations. The broker's top picks include CHINA RES LAND (01109.HK), BEKE-W (02423.HK), GREENTOWN MGMT (09979.HK) and CHINA OVERSEAS (00688.HK). AAStocks Financial News |
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