Daiwa asked whether 1200.HK is a stock whose performance is about to improve, and said that Wachovia's current valuation does not seem to reflect the improvement in the company's outlook after the recent launch of new properties has been sought after by the market and the second-hand housing market is beginning to show preliminary signs of heating up.

Daiwa also noted that historically, Wachovia has not suffered losses for two consecutive six months since its listing in 1995, and that its profits will rebound sharply when market conditions improve. Daiwa also said that many small real estate agencies are expected to be eliminated from the market in the coming months, a trend that will benefit Wachovia.

Daiwa maintains its buy rating on Wachovia with a six-month target price of HK $5.01, which is valued at a price-to-earnings ratio of 10 times based on expected earnings per share for fiscal 2012 and taking into account the company's cash of HK $0.80 a share.

The stock fell 2.1 per cent to HK $3.81 on Thursday.