Chinese Residential Developers Have Potential for Positive Earnings Surprises

Dow Jones08-13

0733 GMT - Analysts at HSBC Global Investment Research continue to see potential for positive earnings surprises among Chinese residential developers. A likely robust September-October peak season, land-market strength and the release of pent-up demand after an unusually rainy summer support a reassessment of the sector's risk-reward, they say in a note. "We remain constructive and expect home prices to stabilize further, underpinned by resilient luxury demand and healthy secondary-market liquidity," they say. Land auctions could also serve as catalysts for certain developers as governments increase land supply. HSBC's preferred names include China Resources Land and C&D International, given their leadership in high-end projects and clearer earnings visibility.

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