Our target price for Country Garden of HK$0.29 is set at a 70% discount to our 2025E NAV of HK$0.96/sh. Our 70% NAV discount is based on a historical discount and is in line with discounts applied to similar players with liquidity pressure or weaker execution or company-specific risks. 

Discount to NAV is the most widely used method to value Hong Kong and China property stocks. NAV measures the value of a stock based on the market value of its assets; for a property company those would be its development and investment properties. The NAV discount is then adjusted for the 'realizability' of those assets and growth potential in that NAV; the more realizable the NAV is, or the larger the growth potential the NAV carries, the lower the discount to NAV should be.

We rate the Country Garden stock High Risk following the ongoing liquidity challenges faced by the company. 

Key  risks that could impede the CG stock from reaching our target price include those related to the economy and policy. 

The key upside risks to the share price would be any stronger-than-expected economic growth in China, and sharper-than-expected appreciation in property prices, rentals and capital values would also present upside surprises to our estimates. Also, any large-scale monetization or disposal of the company's investment properties and other assets would lower the company's gearing level, and help realize the company's NAV, which would justify a lower discount to NAV.