Guotai Haitong Securities released a research report stating that it maintains an "Overweight" rating on China Overseas Development (00688). As an industry leader, the company's value is expected to see a systematic revaluation, driven by the gradual release of new project performance, the product strength of its "quality housing" leading the way, and the capital cycle unlocked by commercial REITs. The report forecasts the company's EPS for 2025-2027 to be RMB 1.18, 1.19, and 1.32, respectively. By referencing comparable companies and fully considering the company's asset quality, business development potential, and strategic planning, a 2026 PB of 0.5X is applied, resulting in a target price of HKD 20.3.
The main viewpoints of Guotai Haitong Securities are as follows:
The transition between old and new projects is advancing, and high-quality new investments are expected to drive an earnings recovery. As the company's historical inventory projects are gradually digested and the pressure from project handovers is released, its residential development business is entering a phase of transitioning between old and new projects. Since 2025, the company has counter-cyclically increased its investment intensity, with new projects highly concentrated in core, high-quality land plots in first-tier and strong second-tier cities, leading to a significant improvement in project quality. Against this backdrop, the profit contribution from new projects is expected to gradually offset historical burdens, promoting earnings release and a recovery in profitability. Furthermore, as a leading central state-owned enterprise in the property sector, the company possesses stronger capabilities in acquiring high-barrier projects such as urban core area redevelopments and large-scale complexes, positioning it to benefit continuously as resources become more concentrated among top players.
The "quality housing" concept is leading industry trends, with product strength and a technology system building medium- to long-term competitive advantages. The company launched its Living OS system, systematically embedding concepts of safety, comfort, sustainability, and intelligence into the entire cycle of design, construction, and operation & maintenance, with validation achieved through demonstration projects. As the proportion of demand for improved housing increases, developers with complete product systems and technological integration capabilities are expected to form differentiated advantages in the new round of industry restructuring. The company's product strength is anticipated to be consistently translated into sales resilience and pricing power.
Commercial operations constitute a second growth curve, with REITs unlocking the capital cycle to enhance value elasticity. The company has established a diversified commercial operation system centered on office buildings and shopping malls, synergized with long-term rental apartments and hotels. Its commercial properties generate stable cash flow and are experiencing continuous scale expansion. The successful listing of its first commercial REIT in 2025 marks a breakthrough in the "acquisition-renovation-operation-exit" pathway, laying the foundation for subsequent injections of mature assets, fund expansions, and improved capital efficiency. The continuous operation of the REIT platform is expected to lower funding costs, enhance asset turnover efficiency, and provide long-term valuation and return elasticity for the company's commercial segment.
Risk warnings include intensified competition in the land market, inventory asset impairments exceeding expectations, and commercial property operation business development falling short of expectations.