China Property: Dropping coverage of select stocks

Research evidence excerpt

China Property: Dropping coverage of select stocks

Goldman Sachs China Property

Gemdale Corp. (600383.SS): Dropping coverage

We are dropping coverage of Gemdale (600383.SS). Our estimates and 12-month

Rmb2.70 target price are unchanged, and our final rating on the stock is Sell.

Our final view: Gemdale, a private ownership enterprise, is ranked 23rd on the 2025

Chinese property developers list (in terms of sales, ranked by CRIC). We have a Sell rating

on Gemdale relative to our coverage as we think its earnings growth and return profile is

overshadowed by its presales/ASP underperformance and tepid land banking, and

liquidity constraints limit the potential to revive the growth outlook in the near term.

Meanwhile, we think refinancing will likely remain an overhang on the shares considering

its debt maturity profile against the prevailing challenging refinancing environment for

POE developers. We could turn more positive in the case of greater clarity on a strong

and sustainable housing market recovery, or improving open-market refinancing

environment for POEs, which could address Gemdale’s refinancing uncertainties and

support a recovery in land investment pace.

Valuation: Our 12m NAV-based target price of Rmb2.70 is based on a 20% discount to

end-26E NAV.

Key risks: 1) Better-than-expected presales performance due to effective policy

loosening; 2) Margin beat, i.e. driven by faster-than-expected property price recovery

especially in high-tier cities; 3) More benign refinancing environment or

stronger-than-expected credit loosening enabling faster balance sheet improvement

and more sufficient liquidity to cope with upcoming debt service needs; 4) Strong

execution of its diversified business and asset monetization opportunities.