COLI Earnings: Weak Results Offset by Rosy Property Sales and Margin Outlook

China Overseas Land & Investment’s third-quarter 2024 results were disappointing, as revenue and operating margin both deteriorated versus the same period last year. We think this was due to anemic property presales and subdued prices since 2023, which have weighed on COLI’s near-term profit. However, the policy-induced rebound in COLI’s contracted sales (mostly presales) in October reassured us that the company should see a progressive recovery in earnings over time. While we lower our 2024 revenue and operating profit forecasts by 3% each, we maintain a constructive outlook of a mid-single-digit earnings compound annual growth rate for 2023-28. This leads to an unchanged HKD 21 per share fair value estimate, and we still view COLI’s shares as undervalued, underpinned by its robust financial health and attractive valuation.