UOB Kay Hian raised its price target for Yuexiu Property (00123.HK) to HKD 4.80, a 14.3% increase, citing a major asset disposal that will improve the company’s financial structure.
The upgrade follows Yuexiu’s announcement of a transaction to dispose of four assets and one business for a total consideration of RMB 4.691 billion. The deal is expected to generate a net gain of RMB 108 million and a net cash inflow of RMB 4.66 billion. The brokerage maintained its "Buy" rating on the stock.
"The asset disposals will optimize its investment portfolio, with all proceeds to be reinvested into residential land acquisitions and operations," management said, according to the UOB Kay Hian report.
The transaction provides Yuexiu with significant capital to strengthen its core residential business, a move that comes amid recent policy support for China's property sector. UOB Kay Hian views the financial restructuring as a key driver for a potential re-rating of the stock.
The successful execution of this asset sale strengthens Yuexiu's balance sheet, providing downside protection and fresh capital for targeted growth. Investors will now watch for the company's next land acquisitions to gauge how the new capital is deployed to enhance its residential portfolio.
This article is for informational purposes only and does not constitute investment advice.
