China Overseas Development (00688) is expected to have many key projects in Shanghai Xuhui Binjiang, Shenzhen Chaozong and other places entering the market in June. CICC believes that this is expected to further strengthen the company's leading advantage in sales.
According to the report released by CICC, it maintains the 'outperform' rating of China Overseas Development (00688), taking into account the company's focus on core first-tier cities and outstanding financial advantages of central enterprises in land reserves, bullish about its valuation regression opportunity during the transition from the policy bottom of the sector to the fundamental bottom of the game, with a target price of HKD 19.12. The mature office rental rate of the company's operation is nearly 90% by the end of 2023, and the relevant income of shopping centers increased by 40% year-on-year in 2023. As for new projects entering the market, the company plans to add 4, 5, and 8 shopping center/office/other commercial formats projects during the 14th Five-Year Plan period, all of which continue to focus on deeply cultivating super high/high-level cities.
According to the report, China Overseas Development's sales performance in the first five months outperformed its peers, and the opening of key projects in the middle of the year is expected to further strengthen its leading advantage. Thanks to the high-quality land reserves, excellent product quality and individual hot projects driving sales, the company announced a total sales amount of RMB 101.7 billion from January to May, a year-on-year decrease of 31%, slightly less than the industry average (the average year-on-year declines of Kr Top10/Top20 real estate companies were 37% and 44%, respectively). The company is expected to have many key projects in Shanghai Xuhui Binjiang, Shenzhen Chaozong and other places entering the market in June, and the bank believes that this is expected to further strengthen the company's leading advantage in sales. Considering the company's abundant and high-quality supply (the company plans to supply a total of RMB 600.7 billion excluding Hongyang this year, 46% and 33% of which are located in first-tier and strong second-tier cities, respectively), the bank predicts that the company's annual sales performance is expected to outperform comparable peers.