Citibank: China Overseas Development (00688) mid-term core profit wins expectations and maintains a “buy” rating

The Zhitong Finance App learned that Citibank released a research report saying that China's Overseas Development (00688) land acquisition focused on core cities, and the cost of equity land for the first eight months of this year was RMB 33.3 billion. The bank expects sales for the full year of this year to be around RMB 252 billion, which is the same year over year, and there is potential room for growth. The bank maintains a “buy” rating with a target price of HK$18.2.

According to Citigroup, the core net profit of China's overseas development in the first half of this year (after revaluation of investment properties and foreign exchange effects) was 7.93 billion yuan, down 10% year-on-year, which is better than the forecast. The gross margin for the period was 16.1%, down from 17.4% in the same period last year; the net profit margin was 8.1%, down from 10.6% in the same period last year. The net debt ratio was 27%, an improvement from 34% at the end of last year. The interim dividend was HK23 cents per share, a year-on-year decrease of 8%, and the dividend ratio remained stable at about 29%.

The report also indicated that China's overseas development financial situation is steady, with financing costs of 2.76%, down from 2.9% in the same period last year and 2.8% for the whole of last year. Cash on hand reached 121.1 billion yuan, up from 104 billion yuan at the end of last year. In the first seven months of this year, contract sales reached 149.5 billion yuan, a year-on-year increase of 13%, far superior to the industry's average decline of 15%, and ranked first in market share in many cities such as Beijing, Shenzhen, and Tianjin.