Asia Pacific Equity Research 31 March 2016 Overweight Shimao Property Holdings 0813.HK, 813 HK In search of the next growth driver Price: HK$11.98 ▼ Price Target: HK$15.20 Previous: HK$16.00 Shimao’s FY2015 results came in broadly in line. Core net profit was down 20% China Y/Y driven by margin deterioration, which is likely stabilizing thanks to recent China / Hong Kong Property market rebound. We believe Shimao’s management is logical enough to preserve AC Ryan Li, CFA cash and is not aggressive in land-banking when land price is rising significantly, (852) 2800-8529 hence net gearing on total equity basis stayed low. Shimao is patiently waiting for
[email protected] land-banking opportunity, and they have slowly demonstrated their ability in Bloomberg JPMA RLI <GO> seeking and closing deals in the secondary market, including a piece in Shanghai Karl Chan in 2015 and recently a piece in Beijing. Should Shimao be able to buy cheap (852) 2800-8513 landbank in top tier cities using low-cost capital, we believe Shimao will resume
[email protected] its growth pace soon, which is a free option attaching to today’s stock price at 5x Jevon Jim 2016E P/E. We believe the lack of growth is fully priced in, and with potential (852) 2800-8538 chairman buyback in the near term, together with strong sales momentum from
[email protected] J.P. Morgan Securities (Asia Pacific) Limited YRD, we stay OW with Dec-2016 PT of HK$15.2, based on 6.5x 2016E P/E.