UBS reported that it raised its rating on 00272.HK from "neutral" to "buy" and raised its target price from HK $1.93 to HK $2.92.

According to UBS, UBS's share price has risen 30% since the beginning of the year, but it is still 49% off its net asset value per share, arguing that its share price still does not fully reflect the group's better sales prospects and improved balance sheet. It is believed that in 2015-19, Ruifang will have about 55 billion yuan of marketable resources in Shanghai, accounting for 65% of Ruifang's residential sales in the next five years. In addition, Ruifang has more development projects than its counterparts in first-tier cities.

If the first phase of Enterprise World in Shanghai is sold, the cash flow of Ruifang will be positive this year. Assuming a capitalization rate of 5 per cent and an annual gross rental income of RMB 250 million, it is believed that the sale of the property will generate RMB 5 billion and reduce the net debt ratio at the end of this year to 71 per cent from 78 per cent at the end of 2014.

As the final proceeds from the sale of the above properties depend on the pricing and the share of the profits given to Brookfield, the bank did not include this in its 2015 earnings test. UBS expects its core profit to reach 1.9 billion yuan in 2016 and is believed to be able to maintain an average gross profit margin of about 38% in 2016-18, one of the highest in the industry.