Logan Property : 2017-08-18Morgan Stanley Recommends Logan Property as its Top-pick Initiate an “Overweight” Rating with a Target Price of HK$9.00

Morgan Stanley Recommends Logan Property as its Top-pick Initiate an 'Overweight' Rating with a Target Price of HK$9.00

Datetime：[2017-08-18]

China/Hong Kong, 18August2017- Renowned securities firmMorgan Stanley initiated research coverage of Logan Property Holdings Company Limited ('Logan Property' or 'the Group', HKEx stock code: 3380) with an 'Overweight' rating and a target price of HK$9.00, and recommends the Group as its top-pick.

With the central government's plan to develop the Guangdong-Hong Kong-Macau Greater Bay Area (the 'Greater Bay Area') into a world class bay area, Morgan Stanley believes that the property market in the Greater Bay Area will worth RMB9.6 trillion in the next 14 years. Morgan Stanley believes Logan Property will benefit from such national policy, as the Group has established strategic presence in the Greater Bay Area which accounts for 77% of the Group's gross asset value and 49% of gross floor area, being one of the highest exposures to the Greater Bay Area among the companies covered by Morgan Stanley. Morgan Stanley points out that the Group's profit margin improvement was due to the strong increase in average selling price of its sales between 2015 and first half of 2017, and the Group's contract sales are expected to deliver a compound average growth rate (CAGR) of 30% in 2017-2019, further driving the earnings to grow at a CAGR of 35%.

Furthermore, Morgan Stanley believes that it is still the right time to own shares of the Group. The firm points out that the Group's share price rose nearly 150% since the beginning of the year, mainly driven by its exposure to Shenzhen and the announcement of the Greater Bay Area development. Morgan Stanley stresses that the current share price reflects the value of Logan Property's existing land bank, but not the value from its urban renewal projects, and these projects' gross profit margins are typically higher at 30-40%. The firm estimates that the acquisition and urban renewal projects that the Group currently holds could be converted into a land bank worth RMB204 billion, which will help drive up its share price. Morgan Stanley is bullish about the growth prospects of the Group.