China Jinmao’s Earnings Growth to See Challenges From Weak Residential Property Bookings

China Jinmao mainly engages in development of high-end properties in wealthy cities of China, with focus shifting to the city operation model in recent years. Through this model, Jinmao capitalizes on the strong ties with local government and taps into sizable primary and secondary land development projects. While primary land development warrants better margins, given lower land cost via a nonauction channel, we think it’s susceptible to large fluctuations in brownfield land provision by the government. That said, we expect China Jinmao to continue to source low-cost landbank for secondary land development through city operation. Despite a pronounced sales dip in 2022-23 amid weak homebuyer sentiment, China Jinmao’s premium projects should maintain traction among housing upgraders, boding well for a moderate sales recovery through 2028, in our view.