Factors to Consider When Analysing Chinese Property Developers

Lianhe Global examines a basket of elements when analysing Chinese property developers. In this commentary, we would like to highlight some of the key factors for investors’ attention:

1. Strategic partners/investors We believe large and financially strong strategic investors are conducive for the growth of a property developer. This type of strategic investors will not only provide additional funding sources and channels, but also give a property developer an advantage in land acquisition costs and channels. However, we do differentiate between a passive investor acquiring equity shares in the open market verse an active investor acquiring equity shares for the purpose of participating in a property developer’s operation. We view active investors favourably over passive ones.