<Research> JPM: Relaxation of 'Three Red Lines' for Chinese Developers is Not a Novel Development
JP Morgan Report on Chinese Property Developers: JP Morgan's report indicated a 6% rise in stock prices of Chinese property developers, attributed to market speculation and the easing of monthly reporting requirements on the "Three Red Lines" by Chinese authorities.
Market Reaction Analysis: The broker suggested that the significant price increase may not solely be due to the news, as the reporting requirement has not been enforced for years, leaving room for other speculative market behaviors.
Future Market Outlook: JP Morgan believes that Chinese property developers may continue to outperform the market leading up to key political events in March and April, favoring stocks like CHINA RES LAND, CHINA RES MIXC, and CHINA JINMAO.
Best Investment Recommendation: Among the developers, LONGFOR GROUP is highlighted as offering the best risk/reward potential in a policy-driven market rally, despite its current short selling ratios.
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M Stanley Predicts Decline in CHINA JINMAO (00817.HK) Share Price Over the Next 60 Days Due to Various Short-Term Challenges
Morgan Stanley's Prediction: Morgan Stanley forecasts a decline in CHINA JINMAO's share price over the next 60 days due to reduced short-term valuation appeal following a recent stock price rise.
Market Outlook: The broker highlights a pessimistic outlook for the real estate market, suggesting that the recent positive sentiment-driven performance is unlikely to continue.
Earnings Projections: Morgan Stanley anticipates multiple short-term challenges for the industry and CHINA JINMAO, including a projected core profit drop of over 50% year-on-year in 2025.
Rating and Target Price: Despite the challenges, Morgan Stanley maintains an Equalweight rating on CHINA JINMAO, citing solid fundamentals and quality land reserves, with a target price set at $1.23.
Citi's Ratings and Target Prices for Chinese Developers (Table)
Citi's Ratings for Chinese Property Developers: Citi has provided investment ratings and target prices for various Chinese property developers, with ratings ranging from "Buy" to "Sell/High Risk" based on their performance and short selling ratios.
Target Prices Overview: Target prices for selected developers include Agile Group at HKD 0.53, C&D International Group at HKD 22.5, and China Overseas at HKD 17.2, reflecting varying levels of investor confidence.
Citi's Ratings for Brokerage Platforms: The investment ratings for Chinese brokerage platforms and project managers also indicate a "Buy" recommendation for companies like KE Holdings and Greentown Management, with target prices set at USD 22.6 and HKD 3.45, respectively.
Market Reactions and Short Selling: The report highlights significant short selling activity across various stocks, indicating market volatility and investor caution, particularly in the context of the Chinese real estate sector.
