On 20 May 2022, Valuable Capital Ltd., a well-known brokerage firm, issued its stock picks and recommended buying CCMGT’s stock with an expected medium and long-term target price of HKD1.70. Valuable Capital Ltd.’s analysis is as follows:
The Group is principally engaged in project management services in mainland China. It uses the “Jianye (建業)” brand to perform the project management services. The Group has been listed on the Hong Kong Stock Exchange since May 2021 upon the completion of the spin-off by CCRE (00832.HK), a Hong Kong listed company. CCMGT is primarily engaged in the expansion, operation and management of asset-light businesses.
For the twelve months ended 31 December 2021, the Group’s revenue achieved RMB1.301 billion, representing a year-on-year growth of 13%; profit attributable to shareholders achieved RMB770 million, representing a year-on-year growth of 13%. The Group is principally engaged in project management services in mainland China. It mainly involves planning and design management, cost management, construction management, completion management, delivery management and sales management. Some projects involved related customer service, property maintenance management, preliminary property supervision, file management, human resources and administrative management, etc. In 2021, the Group had 87 newly contracted projects, representing a year-on-year increase of 8.8%, with newly contracted GFA increased 16.7% year-on-year to more than 10,000,000 sq.m.
At present, the Group had 261 projects under management, with an aggregate GFA of more than 30,970,000 sq. m. The Group had projects under management in more than 100 cities and counties in Henan and 19 cities and counties in provinces other than Henan. Additionally, the Group had 6 government project management projects with a contracted GFA of 790,000 sq.m. The Group is planning to expand its geographic coverage of its business and further expand beyond the Greater Central China region other than Henan province, including Hubei, Shaanxi, Shanxi, Hebei, Anhui, Jiangsu and Shandong.
In connection with the national and provincial “14th Five-Year” Plan, the real estate industry continues to promote the construction of indemnificatory rental housing and urban renewal may become a trend, which drives the gradual increase in demand for small-to-medium project management businesses. Currently, the penetration of the project management industry in China just reached 4.8%. Compared to other countries’ project management industry penetration of approximately 30%, China’s project management industry penetration has huge headroom for growth. Investors are advised to buy CCMGT’s stock at around the current stock price of HKD1.14. Its medium and long-term target price is expected to reach HKD1.70. They may set a stop-loss at the stock price level of below HKD0.99. (Share price at the time of recommendation: HKD 1.14)
