Capital Calls JLL is late to China’s property services party

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HONG KONG, April 12 (Reuters Breakingviews) - Concise insights on global finance in the Covid-19 era.


BETTER LATE THAN NEVER. Jones Lang LaSalle is late to a party. The $9 billion New York-listed company is weighing up a sale of its Chinese property management business for at least $500 million, per Bloomberg. But after a flurry of mainland property services listings in Hong Kong led by developers Evergrande (3333.HK) and Sunac (1918.HK), valuations look inflated. On Friday, JPMorgan analysts cautioned short-term weakness and downgraded several firms, including China Overseas Property (2669.HK), with a target price 10% below market.

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For JLL, property management provides a steady stream of revenue but the business is less profitable than sales and leasing in the People’s Republic. Overall, property management accounted for 58% of the global company’s top line in 2020 and was one of the few segments to deliver growth last year. It presents an opportunity to unlock value. Even without the froth, any sale is likely to net JLL a valuation multiple considerably higher than its own 16 times forward earnings. Evergrande and Sunac units trade at between 28 and 42 times. (By Yawen Chen)

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