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<Research> HSBC Research: Even If CN Home Developers Resume Placements, Unlikely to End Current Rally; Favors CHINA RES LAND (01109.HK) and C&D INTL GROUP (01908.HK)
Recommend 7 Positive 5 Negative 4 |
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HSBC Research published a report noting that the CN Home sector has rebounded sharply recently, rising about 24% in roughly one month, compared with only a 2% gain in the HSI over the same period, once again raising market concerns over whether developers will return to the equity market. Although share placements are not the banks base-case scenario, the sharp equity re-rating has made opportunistic financing more likely. However, the bank emphasized that the rationale for fundraising may not be directly related to balance sheet restructuring needs, as companies remaining in the sector have already undergone significant consolidation. The sector is now dominated by financially sound state-owned enterprises and resilient private enterprises that have successfully navigated the industry downturn. A more reasonable consideration would be to enhance stock liquidity and broaden the shareholder base, similar to the nature of C&D INTL GROUP (01908.HK)s placement last year. Placements at a discount could also be seen as an opportunity for investors to build positions at more attractive entry levels. With fundamentals continuing to improve, the bank believes that even if placement activities re-emerge, they are unlikely to end the current rally and would probably only lead to a brief pause, especially as the traditional peak season in June approaches, when momentum in new home sales is expected to strengthen further. Within the CN Home sector, the bank is most optimistic about CHINA RES LAND (01109.HK) and C&D INTL GROUP (01908.HK), citing higher earnings visibility and ample high-end project pipelines, positioning them to benefit fully from a sector recovery led by first- and second-tier cities. It also believes C&D INTL GROUP still has room to catch up in its share price performance so far this year. (ha/u) Auto-translated by AI This article was automatically translated by AI, the original language 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. More Details
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