Interest-rate cuts had reduced developers’ borrowing costs and lifted profitability, especially for state-owned firms, they said. Meanwhile, a decade-low mortgage-to-income ratio had created a favourable environment for investment and valuation, they added.
The London-based bank raised its target price for five mainland developers – state-controlled China Overseas Land & Investment, China Jinmao and China Resources Land, as well as Greentown and Longfor – by an average of 9 per cent, implying an 18 per cent upside.
Chinese authorities have rolled back punishing measures and reiterated support for the sector as the slump persists into its fifth year. Premier Li Qiang said last week during State Council executive meetings that the country would continue to “push forward with the stable and healthy development of the property market”, while boosting consumption and supporting the equity market.