Analysts say China’s property stimulus could boost stock | Wilnesh News
While China’s real estate development giants gain a foothold amid the ongoing real estate downturn, some analysts have set their sights on home trading and services platform Beike Holdings. The company is listed in the United States under the stock code “BEKE” and its Chinese name is “Beike” and operates the Lianjia platform popular with apartment tenants in major Chinese cities. The stock also trades in Hong Kong. Shell Holdings’ US-listed share price will rise 38% by 2024. “We expect BEKE’s existing and new home transactions to benefit from near-term government support measures in 2025,” Jefferies analysts said in an Oct. 7 report. They also noted how the company could leverage renovations, home rentals and business opportunities to connect consumers with home contractors. Jefferies rates the stock a buy with a $30 price target. This represents an increase of nearly 34% from Friday’s closing price of $22.41. “We expect BEKE to capture long-term value for existing and new home brokerage services in China,” the Jefferies report said. According to a CNBC translation, Chinese President Xi Jinping hosted a meeting in late September and pledged to “contain the housing market decline and promote Stable recovery”. Two days ago, the People’s Bank of China pledged to lower interest rates for existing mortgage holders and extend previous property support policies. Late last month, as China was about to enter a week-long holiday, four major Chinese cities, including Beijing, relaxed restrictions on home purchases. Real estate transaction volume in major cities surged during the holiday period compared with the same period last year and is likely to maintain a similar pace in the coming weeks, industry data shows. But China’s big property developers now face a very different market than in their heyday. This is a shift away from relying on pre-sales of unfinished apartments and towards responding to the market with existing, older inventory and an aging population. “While holiday data showed an improvement in new home sales, we believe the recovery in China’s property market will continue even with potential fiscal support,” Julius Baer Group China strategist and head of Hong Kong research Alex Tong said in a note. For a longer period of time. “We therefore recommend investors to take advantage of the strengthening market to reduce their investments in real estate and related stocks,” Tang said. He did not name specific stocks. Bank of America Securities analysts said in an Oct. 9 report that they held a conference call with an “expert from a large real estate agency chain” who predicted that home prices would stabilize before Will fall another 10%. The expert also warned that he did not see a fundamental change in homebuyer expectations, meaning it remains to be seen whether the high transaction volumes will continue, the report said. About half of the specialist’s stores are connected to KE Holdings’ platform, the Bank of America report said, noting that the company has “very high market share” in most existing and new home brokerage pipelines in China. BofA Securities raised its price target to $24 from $21 while maintaining a neutral rating due to concerns about sustainable growth. Changes in the stock market could also be a catalyst for the stock in the short term. Goldman Sachs analysts said in an Oct. 1 report that iFlytek’s Hong Kong-listed shares may soon be eligible for inclusion in the Stock Connect scheme, which allows mainland Chinese investors to buy Hong Kong-listed stocks. They also “view Beijing as a clear beneficiary of recent policy easing, especially considering that the four first-tier cities together account for 40-50% of existing homes (total transaction volume) in Beijing according to our estimates.” Goldman Sachs analysts pointed out, Even before the latest policy relaxations, the average transaction price of existing homes in Beike fell only 1% month-on-month in September, lower than the 3% month-on-month decline from July to August. “The company has $10.5 billion in net cash as of June 2024 and is targeting annual shareholder returns of 6-7% through share buybacks and dividends,” the analysts said. “We believe the risk-reward profile is skewed to the upside , and gave it a buy rating, citing attractive valuations relative to historical levels and its profit growth prospects. Goldman Sachs set price targets on the company’s U.S.-listed shares at HK$54 ($6.95) and $21. —CNBC’s Michael Bloom contributed to this report.
