Nomura slashed Jinke Services’ target price on its plan to lend 1.5 bn yuan to parent Jinke Property
Nomura slashed Jinke Services’ target price on its plan to lend 1.5 bn yuan to parent Jinke Property

Nomura slashed Jinke Services’ target price on its plan to lend 1.5 bn yuan to parent Jinke Property

 

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Nomura Securities slashed the target price for Jinke Services to HK$15.1 from HK$37.7 and lowered the rating to Neutral from Buy.

Jinke Services, a unit of Chinese property developer Jinke Property Group, said on Monday that it plans to lend up to 1.5 billion yuan, at a rate of 8.6% till December 20, 2024, to its parent company Jinke Property, which triggered market concerns about the independence of its business operations.

Nomura said in a note that lending may detriment Jinke Services’ business as its parent company’s liquidity condition is expected to weaken further given the persistent weakness in the real estate market and Jinke Property will unlikely to repay the loan.

While the value of the collaterals reached 4 bilion yuan, much bigger than the size of the loan, most of the collaterals are shops and parking lots with low liquidity. If the parent company fails to repay the loan, it will be difficult for Jinke Services to sell the collaterals to get cash, said Nomura said.

Jinke Services gained 2.8% to HK$9.99 on Tuesday morning after slumping more than 37% to hit a new record low in the previous trading day.