DBS Group Research has recently released a research report that Downgrades the target price for China Overseas Holdings Limited (00688.HK) to HK$15.3 from the previous estimate. The change comes after a thorough analysis of the company’s recent performance and prospects.
The main reason for the downgrade is that the research firm has lowered its expectations for pre-sales, a key indicator for the Chinese real estate industry. Despite a strong start to the year, DBS now forecasts a stabilizing pre-sales trend, indicating a less severe slowdown in the overall market. According to the research report, DBS has attributed this trend change to increased optimism among potential homebuyers due to lower debt-to-income ratios and tighter financial regulations.
Moreover, the DBS analysts emphasize that although China’s property market is still facing significant headwinds, a contraction in pre-sales growth has become more predictable. Furthermore, the market continues to demonstrate an increasing acceptance of government’s restrictions on lending, as buyers take advantage of higher prices before tightening credit rules go into effect.
It’s also worth noting that the current China Overseas Holding’s net asset value remains impressive, supporting DBS’s adjusted target price at HK$15.3, down 21% from its previous recommendation of HK$19.1.
Overall, while DBS sees some cause for optimism, particularly in pre-sales trends, their assessment for China’s overall real estate market suggests another year of contraction, following the previously-expected one. The new adjusted target price remains at a slight premium, making China Overseas Holdings Limited potentially an attractive holding for those focused on high-end real estate projects in mainland China.
I believe the best place to put a stop on these news article can be news agency websites and various real estate information websites that interested in reporting economic and finance trends in mainland China.