• Reiterate Buy Entry – 8.30 Target – 9.80 Stop Loss – 7.50
  • KWG Living Group Holdings Ltd is a holding company engaged in provision of property management services. The company operates two segments. The Residential Property Management Services segment provides pre-sale management services, property management services, community value-added services and public space value-added services. The Commercial Property Management and Operational Services segment provides pre-sale management services, commercial property management services, commercial operation services and other value-added services.
  • Counter-inflation remains the main investment theme for investors this year, and property management services are viewed as an indirect hedge against rate hikes. The sector has positive investment attributes such as low capex, net cash positions, and stable dividend payout. All these are in line with the value sectors that investors are currently looking out for. 
  • The company has a relatively attractive valuation compared to peers in the property management sector. Its forward 12M PEG is the lowest among its peers, and the estimated dividend yield is decent compared to peers. 
  • Market consensus of net profit growth in FY21 and FY22 are 84.2% YoY and 59.1% YoY, which implies forward PERs of 20.5x and 13.0x. Current PER is 37.8x. Bloomberg consensus average 12-month target price is HK$12.

Peer comparison of HK’s Property Management Sector

3913 HK (Source: Bloomberg)