2017-08-09BOCOM International: Logan Property Rides on Shenzhen Boom and Greater Bay Area Development Initiate a “Buy” rating and a target price HK$8.11

BOCOM International: Logan Property Rides on Shenzhen Boom and Greater Bay Area Development Initiate a 'Buy' rating and a target price HK$8.11

Datetime：[2017-08-09]

China/Hong Kong, [9]August2017- Renowned securities firm BOCOM International has initiated research coverage ofLogan Property Holdings Company Limited ('Logan Property' or 'the Group', HKEx stock code: 3380). The firm believes that Logan Property has strong competitive edge with its strong presence in Shenzhen and cities in Guangdong-Hong Kong-Macao Greater Bay Area ('the Greater Bay Area'). Logan Property rode on the property developing cycle in the last five years to build a substantial high-quality low-cost land bank in Shenzhen. Moreover, other projects in the Greater Bay Area benefit from spillover demand from Shenzhen to enjoy the increase of average sales price. BOCOM International is bullish about the Group's strategic layout in view of the central government plan to develop the Greater Bay Area into a world-class bay area. The firm believes Logan Property has an attractive valuation and hence initiates research coverage for Logan Property with a 'Buy' rating and a target price of HK$8.11.

BOCOM International states that benefiting from the booming property market in Shenzhen, the Group's contracted sales surged from RMB13.35 billion to RMB28.72 billion from 2014 to 2016. The Group has a sizeable land bank with a total gross floor area of 14.80 million sq.m.. The firm estimates the Group's total attributable saleable resources amount to RMB170 billion, of which 80% are from the Greater Bay Area. Projectsin Shenzhen contribute approximately RMB118 billion saleable resources, which is sufficient to secure its sales pipeline and high earnings visibility for the next 3 to 4 years. In addition, the firm expects the gross profit margins of the Greater Bay Area projects to reach 30%-60% or above. With more projects to be launched in the Greater Bay Area, the firm believes gross profit margins may further improve to 32%-34% and core profit may deliver a compound annual growth rate of 30%.

BOCOM International points out that Logan Property has actively participated in numerous M&A projects and urban renewal projects in the Greater Bay Area, which will contribute to maintaining its competitive edge. These projects can generate as much as RMB170 billion in saleable resources, providing an abundant land bank for the Group's mid to long-term development.