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On Friday, JPMorgan upgraded China Jinmao Holdings Group Limited (817:HK) (OTC: CJNHF) stock rating from Underweight to Overweight, significantly increasing the price target from HK$0.46 to HK$1.55. The revision comes as the analyst anticipates the company’s return to growth following a period of earnings decline.
According to JPMorgan, China Jinmao’s positive outlook is attributed to a more proactive approach to land banking and a strategic focus on tier-1 cities, which is expected to help stabilize margins. This marks a turnaround from previous years when the company faced margin and earnings pressure due to less effective land banking decisions made in 2017.
The financial institution noted that China Jinmao has already reversed the net loss experienced in FY23 by FY24 and projects that FY25 could see a mild rebound in margins. The company’s current valuation at 0.34x FY25E price-to-book (P/B) ratio is considered modest when compared to the average of 0.6x among state-owned enterprise (SOE) peers.
The upgrade to Overweight is based on a target FY25E P/B of 0.45x, which, while still below the >0.7x target P/B for SOEs, acknowledges the company’s higher leverage. JPMorgan’s outlook suggests confidence in China Jinmao’s strategic direction and potential for future performance improvement.
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