Company Coverage
Longfor Group (960 HK): 1H26: Expect Postive Bottom Line In 2027 And Back To Stable Growth Trajectory By 2028
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$91.95
HK$150.00
+63.1%
HK$135.00
Analyst
Analyst
Highlights
1H26 core net profit fell 95.4% yoy to Rmb64m, in line with the Rmb50m 100m profit warning. Recurring profit grew 4.2% yoy to Rmb6.7b.
Management expects Longfor to report positive core net profit in 2027 and return to stable growth trajectory by 2028. The Rmb2.5b debt maturity in 2026 will be well covered.
Maintain BUY, lower target price to HK$8.76.
Analysis
1H26 results continued to be dragged by property development (PD). Core net profit fell 95.4% yoy to Rmb64m, in line with the guided range of Rmb50m-100m; attributable net profit of Rmb1,961m (-39.0% yoy) was flattered by a Rmb3,006m revaluation gain. PD revenue fell 42.6% yoy, while PD EBITDA margin declined 13.2ppt yoy. Recurring revenue grew 3.2% yoy, while EBITDA margin improved 2.4ppt to 44.1%. SG&A ratio rose 1.4ppt yoy to 6.9% on a smaller revenue base, while interest expense dropped 15.4% yoy with the average funding cost at 3.36% (1H25: 3.58%). The company declared no interim dividend, as expected.
Highlights
1H26 core net profit fell 95.4% yoy to Rmb64m, in line with the Rmb50m 100m profit warning. Recurring profit grew 4.2% yoy to Rmb6.7b.
Management expects Longfor to report positive core net profit in 2027 and return to stable growth trajectory by 2028. The Rmb2.5b debt maturity in 2026 will be well covered.
Maintain BUY, lower target price to HK$8.76.
Analysis
1H26 results continued to be dragged by property development (PD). Core net profit fell 95.4% yoy to Rmb64m, in line with the guided range of Rmb50m-100m; attributable net profit of Rmb1,961m (-39.0% yoy) was flattered by a Rmb3,006m revaluation gain. PD revenue fell 42.6% yoy, while PD EBITDA margin declined 13.2ppt yoy. Recurring revenue grew 3.2% yoy, while EBITDA margin improved 2.4ppt to 44.1%. SG&A ratio rose 1.4ppt yoy to 6.9% on a smaller revenue base, while interest expense dropped 15.4% yoy with the average funding cost at 3.36% (1H25: 3.58%). The company declared no interim dividend, as expected.
BUY (Maintained)
Current price:
Target price:
Upside:
Previous TP :
HK$91.95
HK$150.00
+63.1%
HK$135.00
Analyst
Analyst
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This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at this link, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
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