Balancing Near-Term Losses and Growing Recurring Income: Maintaining a Buy on Longfor with HKD11.4 Target Price

DBS analyst Ben Wong maintained a Buy rating on Longfor Group Holdings today and set a price target of HK$11.40.

Ben Wong has given his Buy rating due to a combination of factors that balance near-term pressures with improving medium-term fundamentals. He acknowledges that Longfor’s development business is under strain from the weak physical property market, which is likely to push the group into losses in FY25 and has led to downward revisions of FY26–27 earnings forecasts. However, he highlights that the company’s recurring income businesses, particularly shopping malls, rental housing, and property management, are expanding robustly, with additional mall openings and solid same-store sales expected to drive healthy rental growth and add stability to cash flows.
At the same time, Wong points out that Longfor’s financial position is steadily strengthening as management executes on balance sheet optimisation and improves operating cash flow, with a targeted reduction in gearing below 50%. The diminishing contribution of legacy, high-cost development projects over 2026–27 is expected to ease earnings pressure and support a gradual recovery in profitability. With these structural improvements, the stock’s valuation—anchored to a price-to-book multiple in line with its post-2H23 average—appears attractive relative to its long-term prospects, supporting his decision to maintain a Buy rating and a target price of HKD11.4 per share.