Key Takeaways
Nomura lowered its price target for China Resources Land Ltd. to HKD32.6 from HKD35.8 but maintained its Buy rating after the developer’s 2025 profit decline was less severe than expected.
The revision reflects Nomura's lower profit forecasts for 2026-27 due to property sales recognition timing, the brokerage said in a note. The adjustment came even as China Res Land’s 2025 results topped the market’s conservative expectations.
For 2025, the company’s core net profit fell 11.4 percent year-over-year to RMB22.5 billion, beating its own guidance for a 15 to 20 percent decline. The drop was attributed to a lower gross margin in the property development business. Overall revenue remained flat, supported by a 3.7 percent increase in recurrent income to RMB43.3 billion.
The conflicting signals of a sharp profit decline against better-than-guided performance may lead to near-term volatility for the stock. While the price target cut reflects ongoing weakness in China's property sector, the maintained Buy rating suggests the market had priced in a worse outcome.
Nomura raised its sales forecast for 2026-27 by two to three percent, indicating some confidence in future demand. However, it lowered its profit forecast for the same period by 16 to 18 percent, showing concern over continued margin pressure.
The results highlight a divergence in the company's operations, with stable growth from recurrent income streams providing a partial buffer against the downturn in property development. Investors will watch for stabilization in development margins in the coming quarters as the next major indicator for the stock's direction.
This article is for informational purposes only and does not constitute investment advice.
