Bank of America Securities: Lowers target price for CHINA OVERSEAS (00688) to 14.5 Hong Kong dollars and maintains a "Buy" rating.

Bank of America Securities issued a research report stating that they are maintaining a "buy" rating on CHINA OVERSEAS (00688), taking into account the downward revision of profit forecasts. The target price has been reduced from 16 Hong Kong dollars to 14.5 Hong Kong dollars, corresponding to a forecasted price-to-earnings ratio of 11 times in 2027. CHINA OVERSEAS's performance last year met the bank's expectations, with core profit for the year reaching 12.8 billion RMB, a year-on-year decrease of 18.5%. Earnings per share were 0.5 Hong Kong dollars, down 16% year-on-year. Due to the lower-than-expected gross profit margin performance last year, the bank has revised down profit forecasts for 2026 to 2028 by 4% to 7%. It is expected that profits will slightly decline in 2026 and then rebound in 2027 driven by an improvement in gross profit margins. The bank stated that the management remains confident in the Hong Kong market and expects further growth in contracted sales this year compared to last year. According to the bank's estimates, the gross profit margin for CHINA OVERSEAS's Hong Kong projects last year was in the high single digits to low double digits, and it is expected that the sales gross profit margin in 2026 will increase by about 5 percentage points.