Yanlord: Following JP Morgan’s upgrade yesterday, Deustche initiates coverage with Buy call & TP of $2.10 based on 30% discount to NAV estimate of $3.04/share on the Chinese developer. Highlights that as a niche developer focusing in the high-end residential segment, grp has a reputation for delivering quality products and achieving higher margins through premium pricing…..
Expect grp to be less impacted by Shanghai’s property measures as grp has mostly sold out its current stock in Shanghai and new projects are not expected to come on stream until late 2011/early 2021. Add that grp commands a premium pricing strategy over peers and has been able to retain this ability despite its geographic expansion into new cities, and as such is able to achieve one of the highest profit margins in the industry, with an average gross margin estimate of 50% in 2010-2012F.
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