Cheap onshore lending has led property developers to fund their projects primarily with debt and this has resulted in rising leverage for the sector.
In this report, Gimme Credit names the following China Property bonds with underperform:
- China Evergrande Group (EVERRE)
- KWG Property Holding Ltd (KWGPRO)
- Country Garden Holdings (COGARD),
- Logan Property Holdings Co. Ltd (LOGPH)
- Longfor Properties Co. Ltd (LNGFOR)
- CIFI Holdings Ltd (CIFIHG)
- Shimao Property Holdings Ltd (SHIMAO)
- China Overseas Land & Investment (CHIOLI)
"While developers in top-tier cities have enjoyed robust sales growth, we think the upside for top tier developers will be limited from now, in light of the recent policy tightening," continues Ms. Chiaranussati. "On the other hand, we think that the catch-up of income growth in lower-tier cities and the continued migration (from rural to urban areas) should provide better upside for developers in these regions." Gimme Credit thinks developers such as Central China Real Estate Ltd (CENCHI) and Guangzhou R&F Properties (GZRFPR) present a better upside among this leveraged sector and gave them outperform.
Bond prices have been softening since early September, partly due to the government's cooling measures and Gimme Credit believes further softening will create good opportunities among these bonds.
In this report, Ms. Chiaranussati reviews the ten names under Gimme Credit's current coverage and compares their 1H16 results, credit profiles, and outlook.
The full report and media interviews with Nuj Chiaranussati can be arranged by contacting firstname.lastname@example.org.
About Gimme Credit
Gimme Credit is a leading provider of independent corporate bond research and investment recommendations to financial institutions. The company provides intraday and daily research and recommendations on investment grade, crossover, and high yield corporate bonds to thousands of investment professionals at hundreds of financial institutions worldwide. In 2015, the company launched its Emerging Markets Service, extending its coverage to issuers in all markets. Gimme Credit was founded in 1994 and has offices in New York, Chicago, Bangkok, Singapore and Tel Aviv. For more information see www.gimmecredit.com.
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SOURCE Gimme Credit