China Resources Land (CR Land) is a high-quality Chinese property developer with a focus on Tier-1 and 2 cities. One of its competitive advantages is its expertise in urban renewal projects, which it has a first mover advantage. Another investment merit of CR Land is its enviable investment properties portfolio (mostly shopping malls), which allows it to garner robust recurring income streams. This provides stronger earnings visibility and diversification, notwithstanding the adverse impact from Covid-19 related lockdowns and rental concessions extended to its retail tenants. CR Land had also successfully spun off a partial stake in its property management arm in 2020 and unlocked value for its shareholders. Although CR Land is currently trading at a premium to most of its peers’ forward price-to-earnings (P/E) ratio, we believe this is justifiable given its stronger net margin profile and track record. The market also tends to ascribe a higher valuation multiple to higher quality developers in times of uncertainty and volatility.
You may consider this stock but given market volatility right now, I would hold off any purchases till this stock bottoms out. China looks to be weakening from the COVID zero policy and I suspect the stock may fall further.
DYODD
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