Damo: Lowering Kerry Construction's (00683) target price to HK$22 to maintain “in sync with the market” rating

The Zhitong Finance App learned that Morgan Stanley released a research report saying that Kerry Construction (00683)'s short-term profit pressure still exists, and it is difficult to have an unexpected surprise before Jinling Huating, Huangpu District, Shanghai is in the account. The bank believes that the Group's new strategy for moving to the mass market should speed up asset turnover, but profit margins may take a long time to recover.

The bank pointed out that expenses incurred before the opening of new investment properties in China may put pressure on the profit margins of investment properties. The report also mentioned that the Group's debt ratio has improved and dividends have stabilized, but short-term development property accounts are limited.

The bank lowered its valuation base, increased the target net asset value (NAV) discount from 60% to 65%, and lowered the target price of Kerry Construction from HK$25 to HK$22, maintaining the “in sync with the market” rating. To reflect rent renewal adjustments, occupancy rates and interest rates for retail and office properties; update development property entry and completion schedules; and supplementary land storage from 2026 to 2028, the bank raised Kerry E&C's basic net profit forecast by 8.1%, 2.3%, and 3%, respectively.