CCB International lowered Yuexiu Real Estate (00123)'s profit forecast for 2024-2025 by 23-28%.
The Zhitong Finance App learned that CCB International released a research report stating that it maintained Yuexiu Real Estate (00123)'s “outperforming the market” rating, lowered the 2024-2025 profit forecast by 23-28%, lowered the net asset value (NAV) forecast by 26%, and lowered the target price by 38.6% to HK$7 from HK$11.4.
According to the report, Yuexiu Real Estate's 2023 performance was disappointing, and both profits and dividends declined. Core profit fell 17.7% to RMB 3.5 billion, lower than the bank's forecast of 19.4%. The dividend fell 39.3% to HK$0.38, and fell to HK$0.148 in the second half of the year. Despite excellent sales, gross margins declined. The company's asset impairment losses increased from RMB 1,422 billion to RMB 1,573 billion, accounting for about 2% of revenue.
The bank pointed out that the reason for the disappointing performance of Yuexiu Real Estate was that expectations for the company were too high, as the company outperformed the market in the past two years. Despite deteriorating fundamentals, the company continued to outperform its peers in 2023.