20151208-招商证券-China_Property_Sector_36页_1mb_1mb
报告摘要
China Property Sector Summary (November 2015)
Core Content and Key Insights
The report provides an analysis of the Chinese property sector in November 2015, focusing on the impact of credit policy relaxation, market trends, and company-specific fundamentals. It highlights the potential for recovery and the valuation dynamics across different developers.
Main Points
Credit Policy and Market Outlook
- Loosening credit policies are identified as the key driver for the property sector, including lower interest rates and reduced down payment requirements.
- The property market showed a sales volume pickup starting from April 2015, with inventory turnover improving to about 12 months by the end of October 2015.
- Home sales reached a record high in 2015, driven by robust demand and increased mortgage loan quotas.
- Residential investment growth slowed to 1.3% in the first ten months of 2015, with new construction starting down 15% YoY.
- Prices in Tier-1 and Tier-2 cities showed an uptrend of 5-15%, with particularly strong rallies in Shanghai, Shenzhen, and Nanjing.
2016 Outlook
- The government is expected to further boost mortgage loan resources and securitize mortgage assets.
- Urban redevelopment and SOE restructuring could lead to market consolidation through M&A.
- Developers are advised to seek opportunities through M&A due to expensive land costs in major cities.
- The most welcomed products are those located in major cities, with unit sizes not exceeding 140 sqm, and easily accessible to mortgage financing.
Key Investment Themes
| Company | Rating | Key Investment Theme |
|---|---|---|
| CR Land | Buy | Major-city focused; better contracted sales and profit growth than peers in FY15-17E |
| China Overseas | Buy | Competitive funding power, better contracted sales and profit growth than peers |
| Shimao Prop | Buy | The cheapest among large peers, chairman doing shares buyback |
| Agile Property | Buy | A distressed property play; signs of fundamental improvements in cashflows |
| CIFI | Buy | Mid-sized developer benefiting from mass-residential sales rebound; cheap valuation |
| CM Land | Buy | Asset restructuring, potential property developments in Shenzhen Qianhai |
| COGO | Buy | Home sales gradually recover; distressed valuation |
| Yuzhou | Buy | Distressed valuation with competitive brand in Xiamen and Hefei; potential takeover |
| KWG Property | Neutral | Risk of missing 2015 sales target; difficult to replenish major-city landbanks |
| Greentown | Neutral | Slow improvements in net gearing; asset injection from CCCG unlikely within 1 year |
| Country Garden | Neutral | Tier-3 city focused; slow sales recovery and over-supply issues |
Sector Valuation
- The property sector is currently trading at a 40% discount to end-FY15E NAV, or 1.0SD below the mean.
- The report suggests the sector has potential to trade up to the mean or at a 24% discount to NAV, driven by credit policy relaxation.
- MSCI China Real Estate Index outperformed the Hang Seng Index by 65-75% in 2Q2009, but slightly underperformed in 2015.
HK Listed Valuation
| Company | Price (HK$) | Mkt Cap (US$ mn) | 3-mth avg t/o (US$ mn) | NAV (HK$) | Discount to NAV (%) | FY15E P/E (x) | FY16E P/E (x) | FY15E Yield (%) | FY16E Yield (%) | FY15E P/B (x) | FY16E P/B (x) | Net Gearing FY14 (%) | Net Gearing FY15E (%) | Net Gearing FY16E (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Large Peer Avg | - | - | - | - | - | 23.6 | 8.5 | 7.5 | 3.5 | 3.9 | 1.2 | 70.9 | 72.3 | 77.3 |
| China Overseas | 26.25 | 33,397 | 78.2 | 34.0 | 22.8 | 8.2 | 6.8 | 2.5 | 2.9 | 1.3 | 1.1 | 27.1 | 22.4 | 23.2 |
| CR Land | 21.75 | 19,450 | 37.3 | 33.0 | 34.1 | 10.2 | 8.6 | 2.2 | 2.3 | 1.2 | 1.1 | 40.5 | 47.2 | 48.9 |
| Country Garden | 2.96 | 8,627 | 6.5 | 5.0 | 40.8 | 5.6 | 5.1 | 4.9 | 5.8 | 0.8 | 0.7 | 62.2 | 68.0 | 59.1 |
| Evergrande | 6.71 | 12,578 | 37.7 | 5.3 | (26.6) | 12.4 | 12.5 | 2.0 | 2.0 | 1.5 | 1.4 | 251.0 | 288.2 | 297.8 |
| Longfor | 11.04 | 8,301 | 4.0 | 14.6 | 24.4 | 7.1 | 6.5 | 3.2 | 3.5 | 1.0 | 0.9 | 61.4 | 50.0 | 46.0 |
| Shimao Property | 13.28 | 5,950 | 13.9 | 31.6 | 58.0 | 4.8 | 4.3 | 6.6 | 6.8 | 0.7 | 0.6 | 58.6 | 61.8 | 66.9 |
| Wanda Comm-H | 48.85 | 28,535 | 18.0 | n.a. | n.a. | 10.2 | 8.1 | 2.8 | 3.4 | 1.1 | 1.0 | 60.4 | 34.0 | 59.6 |
| China Vanke-H | 19.36 | 25,476 | 19.4 | 22.0 | 12.0 | 9.9 | 8.4 | 3.5 | 4.2 | 1.8 | 1.6 | 6.3 | 7.3 | 16.6 |
A-Share Valuation
| Company | Price (US$) | Mkt Cap (US$ mn) | 3-mth avg t/o (US$ mn) | FY15 P/E (x) | FY16 P/E (x) | FY15 Yield (%) | FY16 Yield (%) | FY15 P/B (x) | FY16 P/B (x) | Net Gearing FY14 (%) | Net Gearing FY15 (%) | Net Gearing FY16 (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Large Peer Avg | - | - | - | 16.7 | 14.4 | 1.8 | 2.2 | 3.5 | 2.2 | 96.8 | 80.7 | - |
| China Vanke-A | 14.56 | 25,475 | 168.6 | 8.7 | 7.4 | 3.8 | 4.0 | 1.6 | 1.6 | 6.3 | 7.3 | 16.6 |
| China Merchants | 35.02 | 13,333 | 150.5 | 18.4 | 15.7 | 1.1 | 1.2 | 2.5 | 2.5 | 33.4 | 31.6 | 3.5 |
| Poly Real Estate | 9.55 | 16,081 | 86.9 | 11.7 | 9.7 | 1.4 | 1.0 | 2.9 | 2.4 | 53.7 | N/A | N/A |
| Simple Average | - | - | - | 20.0 | 17.6 | 1.5 | 2.2 | 9.0 | 8.0 | 96.8 | 80.7 | - |
Company Financials and Performance
Contracted Sales in 10M15 (21 selected developers)
| Company | Ticker | 10M15 (RMB mn) | YoY Growth (%) | 2014 (RMB mn) | 2015E (RMB mn) | YoY Growth (%) |
|---|---|---|---|---|---|---|
| Agile Property | 3383 HK | 33,650 | 0% | 44,160 | 41,600 | -6% |
| COLI | 688 HK | 110,695 | 17% | 113,151 | 139,344 | 23% |
| China Vanke | 000002 CH | 204,130 | 19% | 215,130 | 245,000 | 14% |
| CIFI Holdings | 884 HK | 21,320 | 27% | 21,210 | 25,000 | 18% |
| CR Land | 1109 HK | 72,040 | 36% | 69,220 | 83,000 | 20% |
| COGO | 81 HK | 14,195 | 19% | 14,333 | 14,333 | 0% |
| Country Garden | 2007 HK | 100,500 | 9% | 128,800 | 130,000 | 1% |
| Evergrande | 3333 HK | 154,520 | 44% | 131,510 | 180,000 | 37% |
| Gemdale | 600383 CH | 44,830 | 36% | 49,040 | 54,000 | 10% |
| Greentown China | 3900 HK | 51,000 | -13% | 79,400 | 65,000 | -18% |
| Guangzhou R&F | 2777 HK | 39,270 | -14% | 54,420 | 50,000 | -8% |
| KWG Property | 1813 HK | 15,822 | -5% | 20,523 | 20,000 | -3% |
| Longfor | 960 HK | 41,710 | 8% | 49,050 | 54,000 | 10% |
| Poly Property | 119 HK | 25,350 | 28% | 24,100 | 26,000 | 8% |
| Poly Real Estate | 600048 CH | 121,197 | 13% | 136,677 | 150,000 | 10% |
| Shimao | 813 HK | 53,939 | -6% | 70,209 | 68,500 | -2% |
| Sino Ocean | 3377 HK | 27,590 | -9% | 40,140 | 39,000 | -3% |
| Sunac | 1918 HK | 52,090 | -1% | 65,840 | 66,000 | 0% |
| Wanda | 3699 HK | 109,800 | 2% | 160,150 | 168,200 | 5% |
| Yuexiu Property | 123 HK | 19,801 | 11% | 22,016 | 24,800 | 13% |
| Yuzhou | 1628 HK | 10,087 | 13% | 12,000 | 13,000 | 8% |
| Total | - | 1,323,536 | 13% | 1,521,079 | 1,656,777 | 9% |
Earnings Growth and Gross Margin
- The core net profit for the sector is expected to grow by 20% YoY in FY15E, compared to a -5% growth in FY14.
- Gross margin is expected to remain relatively stable at 27% in FY15E, with COLI and CR Land showing better earnings growth.
- KWG Property is expected to have a higher gross profit margin due to a better sales mix and effective cost control.
Net Gearing
- Net gearing increased slightly to 64% at the end of June 2015 from 62% at the end of 2014.
- Vanke, COLI, and CR Land have lower net gearing than peers, indicating better financial health.
Conclusion
The property sector in China is poised for recovery, driven by credit policy easing and market consolidation. While large developers are expected to maintain a competitive edge, mid and small peers are also showing signs of improvement. The sector is currently undervalued, with a 40% discount to NAV and offering a 4-5% yield. The report recommends buy for most developers, with neutral ratings for those facing challenges in meeting sales targets or improving net gearing.
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