20150817-招商证券_香港_-China_Property_Sector__Expect_no_surprise_from_1H_results,_better_2H15_outlook_46页_2mb

报告摘要

Property Sector Investment Summary

Core Content

This document provides an investment summary of several major Chinese property developers, analyzing their financial performance, interim results, and valuation in the context of the broader property sector. The report highlights the sector's challenges, including a general decline in gross profit margins (GPM) due to price cuts and market conditions, but also identifies companies with strong fundamentals and growth potential.

Main Points

1. China Overseas Land & Investments (688 HK)

Core Profit Growth: Expected to achieve 15% core profit growth in the upcoming interim results (19 Aug).
Cash Position: Holds nearly HKD90bn in gross cash and has a net gearing of 17%, indicating a strong financial position.
Future Opportunities: May pursue new investments, including overseas expansion and acquiring small developers to replenish landbanks.
Position: One of the top picks due to significant landbank exposure in major cities.

2. China Resources Land (1109 HK)

Interim Results: Expected to report a stable GPM with 10% YoY profit growth and a healthy net gearing of 40%.
Outperformance: Anticipated to outperform peers in 2H15E with contracted sales and earnings growth.
Investment Recommendation: Reiterate BUY.

3. KWG Property (1813 HK)

Stable GPM: Expected to maintain stable GPM and flat earnings in the upcoming interim results (26 Aug).
Sales Improvement: Strong contracted sales expected from Sep onwards due to new launches and concentrated exposure in major cities.
Valuation: Distressed valuation at 68% discount to NAV and 4.1x FY15 P/E.
Investment Recommendation: Maintain BUY.

4. CIFI Holdings (884 HK)

Profit Growth: Expected to report a 7% core profit growth in 1H15E, down from 29% in 1H14.
Valuation: Attractive valuation, with a catalyst expected from property sales pick-up in September.
Concerns: Short-term overhang from weak home sales in Jul-Aug and potential earnings downgrade after interim results.
Investment Recommendation: Maintain BUY.

5. Country Garden (2007 HK)

Profit Decline: Expected to report lower GPM at 22% and core profit down 10% YoY due to price cuts.
Valuation: Distressed valuation with a 59% discount to NAV and 4.6x FY15E P/E.
Recommendation: Maintain NEUTRAL until positive changes occur.

6. Agile Property (3383 HK)

Net Gearing: Expected to lower net gearing to 93% from 97% in FY14.
Profit Growth: Core net profit is expected to be -13% YoY in the upcoming interim results (26 Aug).
Positive Outlook: Strong 2H outlook with debt reduction, faster sales, and possible hotel asset disposals.
Valuation: Distressed valuation at 70% discount to NAV and 7.6% yield.
Investment Recommendation: Maintain BUY.

7. Shimao Property (813 HK)

Profit Growth: Expected to report low-single-digit profit growth of 3% in the upcoming interim results (26 Aug).
Valuation: Distressed valuation at 59% discount to NAV and 4.6x FY15E P/E.
Shareholder Activity: Major shareholder has bought 3.8 million shares in early July, indicating confidence.
Investment Recommendation: Maintain BUY with a target price (TP) of HKD17.7.

8. China Overseas Grand Oceans (81 HK)

Sales Growth: 1H15E contracted sales grew 24% YoY, providing room for ASP increases.
GPM Decline: Expected to report a sharper GPM decline of 9.0 ppts to 20% due to aggressive price promotion in Tier-3 cities.
Recommendation: Maintain NEUTRAL due to potential below-market interim net profit.

Key Information

Sector Overview

GPM Decline: The property sector generally saw a decline in GPM in 1H15E due to price cuts, but COLI, CR Land, and KWG are exceptions with limited declines.
Profit Growth: Mixed earnings growth, with some developers reporting negative growth (e.g., COGO: -51% YoY; Agile: -13% YoY).
Net Gearing: Expected to remain flat at Jun-end, with COLI having the lowest net gearing at 18.7%.
Investment and New Start: Still sluggish, indicating continued caution among developers.
Home Sales: Remained buoyant in July, showing strong demand despite market corrections.

Valuation and Performance

NAV Band: Multiple developers are trading at significant discounts to NAV, suggesting potential for re-rating.
Dividend Yield: Some developers offer attractive dividend yields, such as Agile at 7.6%.
Interim Results: Expected to provide insights into the sector's performance, with some companies showing improvement.

Financial Highlights

Balance Sheet: Developers have strong cash reserves, with COLI leading in gross cash.
Cashflow: Operating cashflows are positive, while investing cashflows are negative due to land purchases.
Profitability: Gross margin and core net margin are key indicators of performance, with some companies maintaining stable margins.

Conclusion

The property sector faces challenges with declining GPM and mixed profit growth due to price cuts and market conditions. However, certain developers like COLI, CR Land, and KWG are expected to outperform due to their strong financial positions, limited price cuts, and strategic new launches. Valuation discounts to NAV and attractive dividend yields also present investment opportunities. Despite the current market conditions, the sector is expected to recover in 2H15E, with a projected 22% YoY growth in core net profit for FY15E.

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