COLI (HKEX: 688) and CR Land (HKEX: 1109): Extra Incentives for Home Trade-Ins Drive Sector Growth
Recommendation: BUY
- Target Price for COLI: HKD 16.23
- Target Price for CR Land: HKD 32.35
- Date of Recommendation: September 9, 2024
- Broker Company: MIB Securities (Hong Kong) Ltd
Investment Thesis:
Cities such as Chengdu, Nanjing, and Chongqing are rolling out additional home “trade-in” incentives to stimulate the property market. This includes subsidies, optimized mortgage interest rates, and reduced down payment ratios. In Chongqing, for example, the purchase subsidy for trade-in homes has increased to at least 0.5% of the total purchase price, encouraging residents to upgrade their homes.
COLI and CR Land are poised to benefit from these new measures aimed at making housing more affordable, particularly for home buyers looking to upgrade to new properties. These incentives are likely to drive sales volumes and improve financial performance for developers with a strong portfolio of new properties.
Financial Performance:
Both COLI and CR Land are expected to see increased revenue from higher transaction volumes due to the incentives. Additionally, improved affordability could drive stronger earnings in the upcoming quarters as more buyers take advantage of trade-in programs.
Valuation and Catalysts:
The target prices of HKD 16.23 for COLI and HKD 32.35 for CR Land reflect the expected boost in housing demand driven by government incentives. As these policies take effect, they are likely to enhance the financial performance of these companies, providing a positive catalyst for share price appreciation.
Thank you
