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Despite recently renewed concerns about the liquidity position of Chinese real estate developers, Longfor Group remained one of the few private developers that the broker is currently bullish on, Daiwa Securities said in a note.
Daiwa is less concerned about Longfor’s ability to repay its debt in the near term and sees it as a major beneficiary of the government’s support for the sector, it said.
Longfor has no offshore bonds maturing in the rest of the year, and most of its onshore debt maturing this year is bank loans that can be refinanced, it said.
Daiwa reiterated a Buy rating on Longfor, but lowered the target price from HK$35.2 to HK$26.3, as more defaults by other private mainland developers are expected in the coming months, which could affect sentiment and sales in the market.