DBS: Yuzhou Properties started at Buy as presales growth to outperform

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DBS started Yuzhou Properties at Buy with a HK$7.31 price target, pointing to expectations its presales growth will outperform peers.

“Yuzhou stands out with a remarkable 65 percent and 74 percent pre-sales growth in 2016 and 2017 compared to the mid-cap peers’ average of 56 percent and 57 percent,” DBS said in a note on Friday. “With an ambitious presales target of 60 billion yuan or 50% year-on-year growth for the coming year, Yuzhou’s is set to extend its stellar growth.”

DBS said that while Yuzhou’s gross and attributable landbank in saleable value are both lagging compared with most of its peers, the bank was confident in the company given its developed track record of securing projects via multiple channels.

It noted that the stock is trading at 4.5 times 2018 price-to-earnings and offered the highest dividend yield of 8.8 percent among developer peers, except for Evergrande, compared with the small-to-mid cap average of 7.0 times price-to-earnings and 4.9 percent dividend yield.

The stock ended trade on Monday up 1.80 percent at HK$5.08.