Goldman Sachs cut Country Garden’s target price to HK$1.4, with Neutral rating

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Goldman Sachs gives Country Garden a Neutral rating and lowered its target price to HK$1.4 due to its weaker-than-expected year-to-date sales and increased liquidity pressure.

Goldman Sachs cut its underlying earnings forecast for 2023 to 2025 to reflect lower-than-expected YTD property sales and average selling prices and said the recent failure of coupon payment and land payments also testifies to rising liquidity pressures. 

Given the company’s higher exposure to lower-tier cities, Goldman Sachs expects its liquidity position to remain challenging. The bank’s analysis suggests that Country Garden may need additional capital of 100 billion – 150 billion to sustain the development of smaller scale construction projects.