Equity Analysis /
Hong Kong

HK : KWG Group - Increasing difficulty in repaying bonds

    Raymond Cheng
    Raymond Cheng

    Head of Hong Kong Research

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    Contributors
    Steven MAK
    Will Chu
    CGS-CIMB
    16 August 2022
    Published byCGS-CIMB

    Faces increasing difficult in repaying bonds due Sep given its 1) slow asset sales progress, 2) weak sales, 3) slow refinancing progress of HK project. Ap Lei Chau project is critical for KWG to resolve its liquidity problem as the project can help it obtain HK$4bn-5bn additional refinancing, if completed. We expect KWG’s contracted sales to decline 45% in FY22F and stay largely flattish in FY23F and FY24F, as it focuses on managing its balance sheet. Our TP drops to HK$2.2 to reflect EPS cut and potential bond defaults. Still an Add as cheap valuation (2x FY22F P/E) prices in weaknesses, in our view.