The sharp drop in CNOOC Property's (02669) stock price reflects a decline in investors' confidence in the company as a whole.
The Zhitong Finance App learned that J.P. Morgan Chase released a research report stating that it downgraded the CNOOC Property (02669) rating from “increase in holdings” to “reduced holdings”, and the target price was drastically cut from HK$8.7 to HK$3.8.
Since the company announced last year's results at noon on the 26th, its stock price plummeted by 24% (the Hang Seng Index rose by about 1% on the same day), mainly due to the 23% increase in net profit last year falling short of management's 30% year-on-year increase. Although it was not much lower than expected, the sharp drop in stock prices reflected a decline in investors' confidence in the company as a whole.
Furthermore, at the end of last year, Zhonghai Property proposed to acquire project supervision services from related parties (and then terminated the transaction), which has caused the market to question its corporate management. Unfortunately, although the fundamentals are not that bad, it falls short of market expectations and may trigger a downward evaluation of the valuation.
The bank believes that after the recent sharp drop, the company's stock price may rebound in the short term, but the company suggests selling the goods at high prices. In the medium term, if the company provides a better record in terms of profit guidance and reestablishes corporate governance, it is likely that a positive view of the company will return.