Downgrade to Reduce on liquidity woes

■ Aoyuan’s financial position is unexpectedly weaker than expected, as it is facing issues repaying its ABS, trust loans and some other debts.
■ The company hired a financial advisor last week and it may need to undergo a restructuring ahead.
■ We cut our FY21-23F EPS by 50-59% on lower ASP and sales assumptions and we think the company may not to pay dividends for FY21F.
■ Downgrade to Reduce from Add with a lower TP of HK$1.60.