2021 results affected by weakness in the property sector; expectations have been reset
? China Lesso’s 2021 operating performance was affected by weakness in demand from the property sector.
? The Company booked Rmb1,329.5m in impairment losses and Rmb1,116m in revaluation gains in 2021. Excluding these impacts, the yoy decline in net profit was less than the reported figures.
? The Company’s performance in expected to be supported by increasing exposure to SOE property development, infrastructure investment and normalization of costs.
? We believe expectations have been reset, but the potential from solar energy is a strong catalyst. Reiterate ADD with a lower target price of HK$14.07 (12x 20212 P/E).