20180322-兴业金融证券-雅居乐集团-03383.HK-Agile_Group_Holdings_A_Solid_Dividend_Play_13页_562kb

Agile Group Holdings Summary

Core Content

Agile Group Holdings is highlighted as the best dividend play in the coverage, with a strong focus on its high dividend yields and steady growth in earnings and contracted sales. The company has a solid presence in the real estate sector, with a notable emphasis on property development and hotel operations. The report outlines key financial metrics, forecasts, and valuation data for the period from FY17 to FY20F, providing an in-depth analysis of its performance and future outlook.

Main Points

• Dividend Yield: Agile is expected to offer a dividend yield of 7.5–10.8% for FY18F–20F, which is higher than the industry average.
• Gross Profit Margin (GPM): Agile maintains sector-leading GPMs of 40.6%, 38.8%, and 37.9% for FY18F–20F, driven by high GPMs in Hainan and Zhongshan.
• Contracted Sales Growth: Agile has CAGR of 36.2% in contracted sales for FY17–20F, supported by a CNY550bn landbank.
• Earnings Growth: The company anticipates a CAGR of 25.9% in earnings for FY17–20F, with a recurring net profit growth of 39.0% in FY18F and 20.9% in FY19F.
• Target Price (TP): The new target price is HKD20.00, representing a 26% upside from the current price of HKD15.90.
• Valuation: The recommendation is BUY, based on a 40% discount to the end-FY18F ENAV of HKD34.00.

Key Financial Metrics

Key Drivers

• Recovery in GPM: Agile's gross margin is expected to recover and remain strong.
• Contracted Sales in Low-Tier Cities: The company is expected to benefit from growth in contracted sales in low-tier cities.

Key Risks

• Slow Asset Turnover: A potential slowdown in asset turnover could affect performance.
• Over-Reliance on Tier-3 Cities: The company's performance is somewhat dependent on Tier-3 cities, which could pose a risk.

Company Profile

• Founded in 1992: Agile has over 20 years of experience in property development.
• Operations: The company engages in large-scale complex property development, hotel operations, property investment, and management.
• Geographic Presence: Strong presence in Guangdong (Zhongshan, Guangzhou, Foshan) and expanded to various regions in China and Malaysia.
• Landbank: As of end-FY17, Agile has a total GFA of 34.1m sqm.

Revenue and Earnings Growth

• Revenue Growth: Projected at 22.1% CAGR for FY17–20F.
• Earnings Growth: Expected to grow at a 25.9% CAGR for FY17–20F.
• Recurring EPS Growth: Significant growth in recurring EPS, reaching CNY3.09 in FY20F.

Dividend Payout Ratio

• Payout Ratio: The company has a conservative payout ratio of 45% for FY18F–20F, down from 56.3% and 48.4% in FY16–17, which supports its dividend yields.

Peer Comparison

Agile is compared with major peers in the Chinese property sector, showing it as a strong performer in terms of dividend yield and growth potential.

Valuation Basis

• Target Price: HKD20.00, based on a 40% discount to end-FY18F ENAV of HKD34.00.
• ENAV (End-Year Adjusted NAV): For FY18F, the ENAV is HKD34.00, with a breakdown showing a significant portion in landbank development.

Analysts

• Toni Ho CFA: +852 2103 5888, toni.ho@rhbgroup.com
• Angelo Wong: +852 2103 9218, angelo.wong@rhbgroup.com

Summary

Agile Group Holdings is a solid investment opportunity with strong growth potential and high dividend yields. Its performance is underpinned by sector-leading GPMs and a substantial landbank, supporting its contracted sales growth. The company is recommended as a BUY with a target price of HKD20.00, offering a 26% upside. While there are potential risks, the overall outlook is positive, and Agile is expected to outperform its peers in the long term.