China Resources Land 1H26 performance preview: development impairment may deepen, but asset disposal income and rent provide buffer, maintain buy (Goldman Sachs)

Street Signal | China Resources Land 1H26 performance preview: development impairment may deepen, but asset disposal income and rent provide buffer, maintain buy (Goldman Sachs)

Goldman Sachs' interim results preview for China Resources Land pointed out that impairments in its property development business may deepen, but asset disposal gains and stable rental income from Chengdu Mixc can provide a buffer.

This means that although the development business is a drag, the value created by the company through asset operations and capital recycling (REITs) forms the core support for its valuation, making it less likely to fall significantly.

The market is concerned about impairments in real estate development, but may have underestimated the resilience of the asset operation business and the benefits brought by capital recycling. Currently, the company's valuation is more attractive than the average of its covered peers.

One-sentence conclusion: China Resources Land has hedged against the cyclical downturn in the development business with its strong asset operation and capital recycling capabilities. Its defensive nature and long-term value are particularly prominent in the current environment.

Positive/negative: Positive for China Resources Land (1109.HK) and C-REITs sector. The current stock price may have partially reflected the risks of the development business, but it has not fully priced in the value of its asset operations. Catalysts:

1) Specific guidance on inventory impairment in 1H26 results;

2) Progress in subsequent C-REITs project expansion;

3) Whether the overall sales data of the real estate market can stabilize.