Many reasons support a recovery in the Chinese real estate industry, which should improve the company’s business performance. Firstly, the waning effects of Covid-19 have brought work, production, consumption and entertainment closer to pre-pandemic and normal levels. The Chinese government has also been continuously issuing policies to open financing channels to support the development of the real estate industry, indicating the worst for the industry has passed.
Hong Kong-listed S-Enjoy Service Group Co (SES) is a real estate services company based in China. The company derives its revenue primarily from two businesses — 60% of the total revenue comes from property management services, while 40% comes from value-added services, which cover developer-related, community-related, and smart community services.
The case for SES is that the company is expected to recover from an underwhelming year and downturn in the general property market in China. At current prices, the company is undervalued with good yields, with business and financial fundamentals are intact. The year-to-date and one-year total investment returns for the company are –36.3% and –43.6%, respectively, denoting that the company trades significantly cheaper.
