---
title: "Morningstar lowers the fair value forecast for CHINA OVERSEAS by 10%, performance is poor but expected to improve in 2027"
type: "News"
locale: "zh-CN"
url: "https://longbridge.com/zh-CN/news/281294103.md"
description: "Morningstar lowers the fair value forecast for CHINA OVERSEAS by 9.5%, from HKD 21 to HKD 19, due to more conservative revenue expectations. Despite poor performance, Morningstar still considers it a top choice in the Chinese real estate sector, with a 40% discount on the stock price. Revenue and operating profit are expected to decline by 9% and 26% respectively in 2025, but performance is expected to improve in 2027 with the launch of new projects. The company maintains a robust balance sheet, with a net debt ratio of 34%"
datetime: "2026-04-01T03:15:18.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/281294103.md)
  - [en](https://longbridge.com/en/news/281294103.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/281294103.md)
---

> 支持的语言: [English](https://longbridge.com/en/news/281294103.md) | [繁體中文](https://longbridge.com/zh-HK/news/281294103.md)


# Morningstar lowers the fair value forecast for CHINA OVERSEAS by 10%, performance is poor but expected to improve in 2027

Morningstar released a report indicating that the fair value forecast for China Overseas Development (00688), which has no economic moat, has been lowered by 9.5%, from HKD 21 to HKD 19, primarily due to more conservative revenue expectations. However, the company remains the firm's top choice in the Chinese real estate sector, with its stock price currently trading at a 40% discount to the firm's valuation.

Morningstar stated that China Overseas Development's revenue and operating profit are expected to decline by 9% and 26% year-on-year in 2025, respectively. Although the decline in pre-sold property prices has dragged down profit margins, the company's land investments have increased by 47% to RMB 119 billion, with most new investment plots located in affluent areas of China.

The firm noted that the company's performance has been unsatisfactory, mainly reflecting the previous weak profitability of property sales. However, it expects that new projects will bring higher profit margins due to improved quality, leading to better performance. Therefore, the firm maintains its mid-cycle operating profit margin expectation of 18.3%. Although the five-year compound annual growth rate forecast for revenue has been lowered from 5% to 4%, it still anticipates a gradual rebound in revenue starting in 2027, as housing demand in major cities in mainland China gradually recovers. Newly launched high-end projects should also help alleviate inventory pressure before 2030.

The company maintains a robust balance sheet, with a net debt ratio of 34% in 2025, which is relatively low among Chinese developers. This effectively keeps the average financing cost below 3%, supporting debt repayment, land acquisitions, and project development. (JJ)

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