JPMorgan not excited about newly approved guidelines on urban village renovation, slashed target price of Country Garden, etc

 

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China recently approved guidelines on urban village renovation by China’s State Council and JPMorgan said it’s not excited about the policy as at the current stage, the policy is lacking clarity on details such as cash compensation, scale or funding. 

Given that multiple Chinese cities have already been actively redeveloping urban villages, the latest measures cannot be regarded as new policy and may not be able to assuage investor concerns on the liquidity profile of private-run developers, it said in a note

Until the Chinese government offers more policy support, liquidity concerns on privately-owned property developers will likely remain. The ratings on Country Garden, Country Garden Services and China SCE Group were downgraded to Underweight, with their target prices slashed to HK$0.9/ HK$6.7/ HK$0.35 from HK$2.3/ HK$22/ HK$0.77. 

The broker remained cautious on the Chinese real estate sector and favored China Resources Land, Poly Developments, China Overseas Property and Poly Property Services.