A range of Chinese property developers have been able to issue US dollar bonds in recent weeks at reasonable yields and with longer maturities than were previously possible. The longer duration reduces liquidity risk and should support higher equity valuations.
Shares of Yuzhou, Logan, and KWG appear especially attractive relative to their bonds. Assets of these companies are heavily weighted towards the Pearl River Delta and the Yangtze River Delta which are China’s most attractive markets. Country Garden shares also appear cheap relative to bonds, but that company is more heavily exposed to smaller cities where the property market outlook is weaker.
At the time of publication the author was a shareholder of Yuzhou Properties. The author does not make any recommendation regarding any investment in any company mentioned here. Investors should check all of the key facts cited here from regulatory filings and other public sources prior to making their own investment decisions.