Leon published a research report, reaffirming the investment rating of First Pacific “outperforming the market” and increasing the target price from 8.28 yuan to 8.3 yuan, a potential increase of 23%. This is equivalent to a 35% discount on net asset value per share.

Leon said that considering the Savills management guidelines to set the dividend ratio at 25% and reduce the net interest rate from 2.9% to 2.1%, it was decided to lower its core profit forecast by 8%. It is expected that its net profit for 2010 and 2011 will be 422 million and 496 million US dollars, respectively, but considering that its core profit will increase by 18% to 20% over the next three years.

The bank said that Philex, a subsidiary of Savills, is improving. Next year can be one of its catalysts, and management is also confident that it can further improve its business level. The bank also indicated that Savills's net debt ratio of 13% indicates that its balance sheet is stable, and indicates that the current price is as discounted as much as 43% from the net asset value per share. It is believed that the market's valuation level can be narrowed down in the future.

According to the bank's estimate, Savills Earnings Per Share for 2010 to 2012 were 10.9, 12.9, and 15.4 US cents, respectively, indicating that the current price is equivalent to 6.7 times the predicted price-earnings ratio for 2011.

Savills rose 1.48% yesterday to close at 6.84 yuan.