Company Coverage
China Resources Land (1109 HK): Takeaways From Channel Checks And 1H26 Results Preview
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$34.62
HK$39.60
+14.4%
HK$42.40
Analyst
Analyst
Highlights
- We expect notably lower profit contribution from the DP segment. We forecast around a 30% yoy decline in DP revenue and over 5ppt yoy contraction in DP gross margin in 1H26, partly due to a higher inventory provision.
- CR Mixc malls continue to outperform. Recurring income grew 7.6% yoy in 1H26, with rental income up 12.6% yoy, with high teens tenant sales growth and high single-digit SSSG. Gains from the Chengdu Mixc REIT listing should help keep core net profit and DPS stable.
- We cut our 2026/27/28 core net profit forecasts by 12.7%/12.7%/14.8% respectively, reflecting more conservative DP revenue and gross margin assumptions. Reiterate BUY with a lower target price of HK$39.60.
Analysis
- We had a channel check on CR Land on 16 July. Our key takeaways are:
- Expect notably lower profit contribution from DP segment. Despite the industry downturn, CR Land’s development properties (DP) segment has been reporting resilient top-line growth during 2023-25. However, for 2026, we expect DP revenue to decline from the high base in 2025. For 1H26, we forecast around a 30% yoy reduction in DP revenue, and over 5ppt yoy reduction in DP gross profit margin from 15.6% in 1H25, partly due to higher inventory provision of over Rmb2b (vs Rmb1.55b in 1H25) and continued downward pressure on booking margin.
- CR Mixc malls continue to strongly outperform the market. For 1H26, we expect CR Land’s malls to see high-teens growth in total tenant sales and a high single-digit growth in same-store sales growth (SSSG). The luxury segment continued to outperform the CR Mixc portfolio. According to CR Land, recurring income grew at 7.6% yoy in 1H26, of which rental income grew at 12.6% yoy. We expect recurring income growth in the interim results to be close to this level, with recurring business margins broadly stable, which in our view implies a marked increase in the share of investment properties (IP) in both revenue and profit.
Highlights
- We expect notably lower profit contribution from the DP segment. We forecast around a 30% yoy decline in DP revenue and over 5ppt yoy contraction in DP gross margin in 1H26, partly due to a higher inventory provision.
- CR Mixc malls continue to outperform. Recurring income grew 7.6% yoy in 1H26, with rental income up 12.6% yoy, with high teens tenant sales growth and high single-digit SSSG. Gains from the Chengdu Mixc REIT listing should help keep core net profit and DPS stable.
- We cut our 2026/27/28 core net profit forecasts by 12.7%/12.7%/14.8% respectively, reflecting more conservative DP revenue and gross margin assumptions. Reiterate BUY with a lower target price of HK$39.60.
Analysis
- We had a channel check on CR Land on 16 July. Our key takeaways are:
- Expect notably lower profit contribution from DP segment. Despite the industry downturn, CR Land’s development properties (DP) segment has been reporting resilient top-line growth during 2023-25. However, for 2026, we expect DP revenue to decline from the high base in 2025. For 1H26, we forecast around a 30% yoy reduction in DP revenue, and over 5ppt yoy reduction in DP gross profit margin from 15.6% in 1H25, partly due to higher inventory provision of over Rmb2b (vs Rmb1.55b in 1H25) and continued downward pressure on booking margin.
- CR Mixc malls continue to strongly outperform the market. For 1H26, we expect CR Land’s malls to see high-teens growth in total tenant sales and a high single-digit growth in same-store sales growth (SSSG). The luxury segment continued to outperform the CR Mixc portfolio. According to CR Land, recurring income grew at 7.6% yoy in 1H26, of which rental income grew at 12.6% yoy. We expect recurring income growth in the interim results to be close to this level, with recurring business margins broadly stable, which in our view implies a marked increase in the share of investment properties (IP) in both revenue and profit.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$34.62
HK$39.60
+14.4%
HK$42.40
Analyst
Analyst
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