Morgan Stanley has released a research report adjusting its risk-reward forecast for C&D International Group (01908), lowering its target price by 3% from HK$19.3 to HK$18.64 while maintaining an Overweight rating.
The investment bank stated that it has incorporated the company's first-half results for this year and the impact of completed-home sales policy on property sales, cutting its core earnings forecasts for 2026 to 2028 by 1%, 10%, and 8% respectively to reflect weakening property sales under the completed-home sales policy, partially offset by better-than-expected interest income and savings on selling and administrative expenses.
Together with recently added land reserves, the bank applied a sum-of-the-parts valuation, maintaining a 35% discount on its updated net asset value and net debt estimates to arrive at the new target price.
The bank expects that C&D International Group, backed by a solid balance sheet and its parent company's continued choice of scrip dividends which keeps cash flow impact manageable, can sustain a high dividend payout ratio.
The bank believes the company's state-owned background and low leverage can support its land replenishment, helping it maintain above-peer sales growth in the medium term; the current valuation of approximately 8 times forward price-to-earnings ratio and dividend yield of about 7% is attractive.
Comments