Light at the end of the tunnel
​Initiate coverage with a BUY rating and TP of NT$77: The overriding market sentiment on the property sector has clearly picked up in recent weeks, supported by the introduction of 1) favorable house tax reform in Taipei; and 2) urban renewal incentives. The clear taxation outlook and continued low interest rate environment suggests property trading volume is likely to bottom out in late-2017F. In the recovering property market, we believe Chong Hong will outgrow peers on the back of its solid project pipeline, focus on Greater Taipei and prudent financial control. Our TP of NT$77 is derived from 0.7x our NAV estimate, implying a 2017F P/B of 1.5x. Chong Hong is currently trading at 1.5x/1.2x 2016/17F BVPS with an attractive cash dividend yield of 8.7%.
Chong Hong Construction is principally engaged in the subcontract construction, selling and leasing of properties. Co.'s products and services include the construction of residential, industrial and commercial buildings, such as plant buildings and office buildings; and leasing and selling of residential properties, plant buildings, stores and parking lots. Co. operates its businesses mainly in Taiwan.
Yuanta is a Taiwan-headquartered brokerage with a growing presence in Asia, especially across Greater China. Our team of 140+ provides cutting-edge analysis on key sectors, spread across offices in Taiwan, Hong Kong, Shanghai (A-Share), Seoul and Jakarta. With an ever-expanding coverage universe of 400+ companies, we provide in depth analysis with unique local color to investors. Consistently being voted the Best Investment Consulting Firm in Taiwan in the AsiaMoney broker poll is evidence of our strength. We target providing an extensive range of research, from small, to mid-sized, to large cap. We bring you the big, well-covered names, as well as going off the beaten track to research the less-familiar companies.
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