UBS: Estimates CHINA RES LAND (01109) recurring business value at HK$27 per share; reiterates "Buy" with target price of HK$45

UBS stated in a research report that since the pre-sale model changed at the end of August, CHINA RES LAND's (01109) share price has fallen about 14% cumulatively, reflecting investors' concerns about its property development business; the bank estimates that even assuming the property development business is valued at zero, the recurring business value is about HK$27 per share, and it maintains a "Buy" rating and a PE-based target price of HK$45 unchanged. Potential catalysts include CHINA RES LAND or developers raising prices. The bank assumes that the property development business contributes no value or profit, and uses two methods to value the recurring business. The bank estimates that core profit from the recurring income business in 2026 will be RMB 12.8 billion, up 10% year on year; and estimates that gains from asset spin-off disposals in 2026 will be RMB 5 billion, and will remain at RMB 5 billion per year from 2026 to 2030 under the "15th Five-Year Plan." The bank classifies disposal gains from the property development business under the recurring income business. Based on a 37% dividend payout ratio and a 4% dividend yield, the implied value is HK$27 per share; if a 10x PE multiple is applied to the recurring income business (including disposal gains), it is HK$29.1 per share.