Equity Analysis /
Hong Kong

HK : China Lesso - 2021 results affected by weakness in the property sector; expectations have been reset

    Mark Po
    Mark Po

    Research Analyst

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    CGS-CIMB
    30 March 2022
    Published byCGS-CIMB

    China Lesso’s 2021 operating performance was affected by weakness in demand from the property sector. The Company booked Rmb1,329.5m in impairment losses and Rmb1,116m in revaluation gains in 2021. Excluding these impacts, the yoy decline in net profit was less than the reported figures. The Company’s performance in expected to be supported by increasing exposure to SOE property development, infrastructure investment and normalization of costs. We believe expectations have been reset, but the potential from solar energy is a strong catalyst. Reiterate ADD with a lower target price of HK$14.07 (12x 20212 P/E).