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Agile Group: Growing Its Non-Property Business

We initiate our coverage on Agile Property Holdings (3383 HK) (“Agile”) with an overall NEUTRAL recommendation on the AGILE complex (increasing leverage concerns are mitigated by a strong business profile at the moment) and a tactical OVERWEIGHT recommendation on AGILE 21s which we view as a cheaper/higher spread pick-up option compared to its peer group.

Agile is a well-entrenched mid-sized, predominantly South-Eastern Chinese property developer with a traditional focus on residential and tourist villas. Its higher quality tourism/Tier 1 Chinese city developments have typically commanded a higher premium against their peers, which have contributed to its higher gross and net margins. The company has grown both organically and inorganically over the years – on the latter, it is known for being one of the first visible Chinese property developers to make extensive use of JVs (which have posed both advantages and disadvantages). Another first it can claim is being the first Chinese property developer to issue an international subordinated corporate hybrid (back in 2013).

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