HSBC Global Securities released a report, the first to Macau Lijun (01680.HK) to reduce the rating, the target price of 1.10 yuan.

The bank pointed out that the Group is the only casino operator to develop vigorously in the Macao Peninsula, continuously renovating the Fisherman's Wharf, and developing new business and integrated resorts in Cape Verde, West Africa, with the goal of opening in 2019.

The bank is optimistic about the long-term future of Macau Lijun. Assuming the fisherman's wharf is renovated successfully, the group is expected to achieve a compound annual profit growth rate of 60 per cent in 2016-18. However, the bank's earnings and EBITDA forecasts for 2015-17 were lower than market expectations. The bank believes that the current valuation is too high, market expectations for fisherman's wharf are too high, and there is a need for capital. Although the group has net cash this year, it is expected that the net debt ratio will rise to 22% and 63% next year and 2017, and equity or debt financing is expected.