UBS: Reiterates “Buy” rating from the target price of Shell-W (02423) to HK$69.4

The Zhitong Finance App learned that UBS released a research report saying that Shell-W (02423) is the agent of the Chinese property market cycle and believes that the market is ignoring its operational improvements during the five-year downturn in the property market; the bank reaffirmed the “buy” rating and raised the target price by 5% to HK$69.4 from HK$66. The new target price is equivalent to 17 times the projected price-earnings ratio in 2027.

The bank pointed out that Shell has strengthened agent productivity, platform capabilities and cost efficiency, and the second-quarter results can be seen. As housing prices in mainland China stabilize, and changes in pre-sale policies bring benefits to second-hand property transactions, investors are expected to pay more attention to Shell's potential excess earnings rather than just the volume of property market transactions. The third quarter results to be announced in mid-November may be a catalyst.

The bank raised Shell's profit forecast for 2026 to 2028 by 4%, 13%, and 28% based on higher agency productivity (contributing profit margin) and higher GTV for second-hand property transactions.