Chinese private-run property developer Longfor Group’s core profit rose by 0.6% year over year in the first half of 2023 to 6.59 billion yuan, in line with expectations, BofA Securities said in a note.
Longfor has 220 billion yuan of saleable resources in the second half of the year, implying that it needs to achieve a sales rate of 45% to achieve its full-year contracted sales target of flat growth, it said.
The management expected development property gross margins to recover to above 20% over time, mainly due to better margin potential on land purchased from 2022 onwards, but the broker sees more pressure on average selling prices in the near term.
BofAS lowered the forecast of its core profit for 2023-25 by 2% to 7%, while cutting its target price from HK$27 to HK$25, maintaining its Buy rating and still regarded Longfor as its top pick in the industry.