Title: Jefferies Lowers Target Price of Cheung Kong Group to HK$46, Gives “Hold” Rating
Date: August 7, 2023
Jefferies, a renowned financial journal, has recently released a research report that includes a lowered target price for Cheung Kong Group, along with a “Hold” rating. The report highlights the decline in the company’s basic profit, excluding revaluation income, during the first half of this year. The results fell 34% YoY to approximately HK$7.6 billion, in line with the bank’s full-year forecast of a 44% drop.
Cheung Kong’s mid-term confirmed property sales revenue also faced a significant setback, dropping nearly 60% YoY to around HK$8.246 billion. This weaker-than-expected performance has raised concerns among analysts. Jefferies noted that while Cheung Kong continues to focus on returns and boasts a robust balance sheet, its property sales account is weaker compared to market expectations. Additionally, the bank expressed disappointment with the mediocre performance of investment property income.
In light of these unfavorable developments, Jefferies is maintaining its “hold” rating on Cheung Kong. The bank predicts limited positive catalysts for the company in the near future, aside from potential share repurchases. Consequently, Jefferies has revised its basic earnings per share forecast for this year and next, reducing it by 5% to 10%. Furthermore, the target price has been adjusted from HK$47 to HK$46.
Jefferies’ report also highlights its increased optimism towards other Hong Kong real estate stocks, specifically Sun Hung Kai Properties and Henderson Land Properties. These companies are expected to outperform Cheung Kong Group in the current market conditions.
As investors analyze these assessments, Cheung Kong Group will have to take diligent measures to address the challenges posed by its weakening property sales and subpar investment property income. The company’s management team may need to explore strategies that can help bolster financial performance, rebuild market confidence, and potentially attract new investors.
Disclaimer: The mentioned content is based on the research report published by Jefferies. Investors are advised to conduct thorough analysis and consider other relevant factors before making any investment decisions.