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2009-4-16 10:03:00 a.m. HKT, XFNA
DJ MARKET TALK: Greentown's Trust Financing To Boost Gearing -UOB
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| 0950 [Dow Jones] STOCK CALL: Greentown China's (3900.HK) trust financing adds to its interest burden, pushes net gearing to sector's highest, UOB KayHian says. Notes company to exchange 40% interest in Hangzhou Qianjiang New City Project with Harbour Centre Development (0051.HK) for 100% of Shanghai New Jiangwan City Project; says deal neutral to Greentown. Notes company also obtained CNY1.69 billion financing via trust, with annual interest rate as high as 14% vs current benchmark bank loan rates at 5%-6%. Estimates financing to raise net gearing to 160% vs 140% at end-2008. Says company might need share placement or asset disposal to reduce gearing over next year. Cuts FY09-10 net profit forecasts by 23%, 29% on weak sales performance, rising interest burden, relatively poor track record in project completions. Keeps at Sell, but raises fair price to HK$3.80 from HK$2.50, based on 65% discount to current NAV. Stock +3.4% at HK$4.55 at pre-open. (LES) Contact us in Hong Kong. 852 2802 7002; MarketTalk@dowjones.com
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(Delayed by 1 hour)
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