Damo: Greentown China (03900) maintains “holdings reduction” rating due to inventory removal pressure

The Zhitong Finance App learned that Morgan Stanley released a research report saying that Greentown China's (03900) interim results reflect continued inventory pressure, and gross margin for property development was lower than expected. Coupled with slow accounting progress, the 2026 and 2027 core profit forecasts were lowered by 14% and 13% respectively. However, due to delays in accounting for some projects to 2028, the 2028 core profit forecast was raised by 10%. The target price was lowered from HK$7.15 to HK$6.82. It is expected that Greentown China's stock price will drop by more than 80% within the next 30 days. Damo maintains a “holdings reduction” rating. It believes that Greentown China's profit recovery prospects are slower than expected. Although the pressure to remove inventory has been reduced, it is still significant. The Group's prudent land reserve strategy and recent management changes will affect contract sales performance this year and next two years.