Logan Property : 2017-08-15 Logan Property’s Interim Profits Beat Expectations CICC and Deutsche Bank Raise Target Price to HK$9.40 and HK$8.42 Respectively

Logan Property's Interim Profits Beat Expectations CICC and Deutsche Bank Raise Target Price to HK$9.40 and HK$8.42 Respectively

Datetime：[2017-08-15]

China/Hong Kong, 15August2017- In their latest research reports, both renowned investment banks CICC and Deutsche Bank consider that the interim results of Logan Property Holdings Company Limited ('Logan Property' or 'the Group', HKEx stock code: 3380) show vigorous growth. CICC is bullish about the Group's long-term development outlook in light of its the high profitability of its star projects and its strong financing capability. CICC maintains its 'Buy' rating for Logan Property, with the target price raised by 11.64% to HK$9.40. Deutsche Bank is positive about the outlook of urban renewal projects in which the Group is proactively participating. Deutsche Bank maintains its 'Buy' rating for Logan Property, with the target price raised by as much as 47% to HK$8.42.

The Group's interim results beats market expectations. Revenue jumped by 95% to RMB12.38 billion and core profit increased by 195% to RMB2.55 billion. The Group surprised the market by paying out an interim dividend and special dividend of HK$0.22 in total and the dividend yield was as high as 3%. The Group raised its sales target for 2017 to RMB37 billion. Considering the Group's abundance of low-cost, high-quality saleable resources, both CICC and DB expect Logan Property's contract sales to grow at a compound annual growth rate of above 30%.

CICC points out that the delivery of star projects like Logan City will strongly lift the Group's profitability and expects the gross profit margin of Logan City to reach above 60%. In tandem with other projects, Logan City will help to push the Group's gross profit margin to 34%-35% in 2017 to 2018. CICC believes that the Group has ample cash flow, with bank balances and cash reaching RMB23.5 billion. The manageable leverage ratio will improve the Group's ability to withstand adversity.

Deutsche Bank thinks the land costs of six urban renewal projects in Zhuhai, Huizhou and Chaozhou in which Logan Property is participating are relatively low, and are expected to provide saleable resources that worth RMB18 billion. Taking other potential urban renewal projects into consideration, Deutsche Bank predicts that the Group's saleable resources may reach RMB388 billion, which would allow the Group to maintain gross profit margins at levels above the sector average of 35%-36%. The Group is well positioned for strong growth in the future.