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CENTRAL CHINA REAL ESTATE LTD. (832 HK)

​Central China Real Estate Limited (CCRE) is an attractive investment opportunity in China’s Real Estate market. We believe the company’s evolving asset-light business strategy, focus on fast growing and developing Henan province in the country, diversified business and a strong balance sheet are drivers likely to generate sustained growth in the coming years. Further, a significant valuation discount to peers and one of the highest dividend yields in the industry are compelling factors that could drive meaningful upside in the stock price. Consensus estimates call for a 28% upside from the current trading level over the next 12 months.

Business overview

Central China Real Estate Limited (CCRE) is an investment holding company founded by Po Sum Wu in 1992. Headquartered in Hong Kong and listed on the Hong Kong Stock Exchange, CCRE’s operations include property development, leasing, construction and hotels.

• ​CCRE is the largest developer in Henan – the third most populous province in China with the fifth strongest GDP, a young population base and a low urbanization rate
• CCRE currently has a land bank of 18.6m square meters (sqm) which is strategically located in city centers across 18 prefecture cities and 20 county-level cities in Henan province, of which Zhengzhou accounts for 34.2% of the land bank
• During 2015, Henan’s real GDP growth was 8.3% (1.4 ppt higher than the national average). Also, Henan’s property market (Gross floor area: GFA sold) expanded by 8.6% while national growth averaged 6.5% in 2015