Logan Property : 2017-08-22Logan Property’s High Margin Projects Support Earnings Growth CMBI Maintains “Buy” with Target Price Significantly Raised to HK$8.44

Logan Property's High Margin Projects Support Earnings Growth CMBI Maintains 'Buy' with Target Price Significantly Raised to HK$8.44

Datetime：[2017-08-22]

China/Hong Kong, 22 August2017- In its latest research report, renowned securities firm CMB International ('CMBI') highlights the outstanding results for the first half of 2017 of Logan Property Holdings Company Limited ('Logan Property' or 'the Group', HKEx stock code: 3380), with profitability exceeding expectations. Having taken into consideration that Logan Property raised its annual sales target to RMB37billion and the Group has a quality land bank with high profit margins, CMBI raises earings forecast for the Group by 41.5%, 14.7% and 10.5% for 2017, 2018 and 2019, respectively, and maintains its 'Buy' rating, with a target price significantly raised to HK$8.88 from HK$5.85.

In the first half of 2017, Logan Property's revenueincreased 94.6% year-on-year to RMB12,382million. During the period under review, several high margin projects were delivered,which geared up the Group'sgross profit margin to 39.5% and lifted up the core profit by 195.4% to RMB2.553 billion with core profit margin at 20.6%.

CMBI indicates that Logan Property continues to penetrate in the Guangdong-Hong Kong-Macau Greater Bay Area ('the Greater Bay Area'). As of 30 June 2017, the Group's total saleable resources reached RMB388 billion, out of which over 80% is located within the Greater Bay Area. In addition, acquisition and urban renewal channels have become important ways for the Group to acquire land, as 47% of its saleable resources come from projects that were obtained through these channels. Of which, six projects with a total of saleable resources of RMB16.5 billion and a gross floor area of 1.18 million square meters are expected to formulate supply in the short term, which will drive the Group's future sales.

Furthermore,Logan Property has a healthy financial position with RMB23,450 million cash on hand. In the first half of the year, Logan Property issued new debts at lower interest rates to redeem high yield notes, bringing down its costs of debts to 5.9% from 6.1%. Net gearing ratio was 4.4 percentage points lowered to 67%.