Comprehensive Analysis of CR Mixc Lifestyle: A Deep Dive

Report Date: December 3, 2024

Broker: UOB Kay Hian

Overview

In an insightful company update, UOB Kay Hian maintains a “BUY” recommendation for CR Mixc Lifestyle with a revised target price of HK\$32.15. This revision comes amid rising macroeconomic uncertainties, yet the company demonstrates strong management capabilities and potential for growth. With an upside potential of 10.1%, the report provides a detailed analysis of CR Mixc’s operations and future prospects.

Company Description

CR Mixc Lifestyle, a subsidiary of China Overseas Land & Investment, offers comprehensive real estate services including development, management, and investment in commercial properties. The company has a global customer base and has shown resilience and adaptability in its operations.

Stock Performance

CR Mixc’s stock is currently trading at HK\$29.20 with a 52-week high of HK\$38.78 and a low of HK\$19.43. The stock has shown a 10.3% year-to-date increase, reflecting positive sentiment in the market. Major shareholders include China Resources Land Ltd with a significant 59.51% stake.

Key Insights from the Reverse Roadshow

During a reverse roadshow in Shenzhen on November 28, 2024, CR Mixc showcased its innovative project management through site visits to the Shenzhen Talent Park and the Longgang Universiade Sports Centre. These projects highlighted the company’s capability to drive strong foot traffic and tenant sales through strategic location and partnerships.

Operational Performance

CR Mixc’s malls reported improvement in Same-Store Sales Growth (SSSG) in the fourth quarter of 2024, following a slowdown in the third quarter. The year-on-year improvement in October 2024 was 7.2%, surpassing the national retail sales growth of 3.5% year-on-year. This recovery is attributed to strategic focus on enhancing the membership system and pursuing high-quality growth.

Third-Party Expansion

In the first eleven months of 2024, CR Mixc expanded its non-commercial third-party projects by Rmb2.2 billion, promising an annualized order value of Rmb0.7-0.8 billion. Additionally, the company secured 12 third-party commercial projects, showcasing its ability to grow its market presence despite economic challenges.

Financial Forecasts and Valuation

UOB Kay Hian has adjusted the earnings forecasts for 2024, 2025, and 2026 by 1.2%, 3.8%, and 6.4% respectively, reflecting the macroeconomic uncertainties. The report maintains the gross profit margin while lowering free cash flow estimates due to increased accounts receivable. The target price of HK\$32.15 is derived using a discounted cash flow model with a WACC of 11.9%, positioning CR Mixc at 14.7x 2025F PE.

Potential Catalysts for Growth

Key catalysts that could propel CR Mixc’s stock in the future include stronger-than-expected fiscal and monetary policies in 2025 and lower-than-expected business expansion. These factors could enhance the company’s financial position and market performance.

Conclusion

CR Mixc Lifestyle stands out as a resilient player in the real estate sector, with robust management capabilities and a strategic approach to growth. The company’s focus on high-quality expansion and innovative project management positions it well for future success. UOB Kay Hian’s analysis underscores the potential for continued growth and recommends investors to maintain a “BUY” stance.

Disclaimer

This report is prepared by UOB Kay Hian Private Limited for informational purposes only and does not constitute an offer or solicitation to deal in securities.