Morgan Stanley slashed Country Garden’s target price by 69% to HK$0.75 from Hk$2.4, with Underweight rating
COMPANY NEWS REAL ESTATE STOCKS VIEWS & ANALYSIS
Morgan Stanley slashed Country Garden’s target price by 69% to HK$0.75 from Hk$2.4, with Underweight rating
COMPANY NEWS REAL ESTATE STOCKS VIEWS & ANALYSIS

Morgan Stanley slashed Country Garden’s target price by 69% to HK$0.75 from Hk$2.4, with Underweight rating

 

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The risk of default is increasing for Country Garden, which announced that it will consider various debt management measures to ensure its long-term viability after failing to pay its coupons, Morgan Stanley said in a note.

Morgan Stanley considered Country Garden’s sluggish sales, large debt maturities and limited refinancing channels as clear signs of rapidly deteriorating liquidity.

The bank lowered its revenue forecasts for each year between 2023 and 2025 by 10%, 31% and 27%, respectively, to reflect weaker sales, possible extension of project completion time and lower gross profit margin forecasts. 

It slashed its target price by 69% to hK$0.75 from the original HK$2.4, and downgraded its rating from Equalweight to Underweight. 

The company may take a few years to recover from liquidity challenges, considering its huge business exposure in lower-tier cities, Morgan Stanley said.