20160627-招商证券_香港_-China_Property_Sector_Key_Theme_Two_Privatization_and_assets_restructuring_16页_2mb_2mb

报告摘要

Summary of China Property Sector Report

Core Content

This report discusses the key trends and investment opportunities in the China property sector, focusing on privatization, asset restructuring, and the potential for special dividends. It highlights the sector's distressed valuation and the attractiveness of yield, suggesting that property developers are increasingly looking to unlock value through these strategies. The report also includes detailed financial analyses of several listed companies and non-property-focused firms that are involved in land site disposals.

Main Points

1. Privatization and Asset Restructuring as Key Themes

Expected Trends: Property privatization and asset restructuring are expected to be key themes in 2015-17E due to distressed valuations and attractive yields.
Sector Valuation: The sector's NAV discount is at 42%, which is 1SD below the 7-year mean.
Yield Attractiveness: The sector offers an attractive yield of 5%.

2. Strong Incentives for Delisting or Restructuring

Mid-sized Developers: Trading at 63% discount to 1-year forward NAV or 0.5x FY16E P/B.
Examples of Privatization:
- New World China (917 HK) approved for privatization at 1.15x PB in Mar 2016.
- Wanda (3699 HK) undergoing privatization at 1.0x FY16E PB.
Incentives: Major shareholders have strong incentives to delist or restructure after large-scale asset disposals.

3. Non-core Asset Disposals and Special Dividends

Objective: Developers are selling non-core assets (hotels, shopping malls) to improve ROE and asset turnover.
Examples:
- Shimao (813 HK) signed RMB4bn disposal of Beijing Fortune Times to Letv.
- Agile (3383 HK) plans to sell RMB10.7bn worth of non-core assets, equivalent to 87% of its market cap.
Potential Special Dividends: Companies like Shimao and Agile are expected to pay high special dividends after selling non-core assets.

4. Large-scale Restructuring and Potential Privatization

Asset Disposals: Developers like Shui On Land (272 HK) and CC Land (1224 HK) are disposing large landbank assets.
CC Land: Estimated net cash and investment securities at HK$3.9/share at FY16E, equivalent to 189% of current share price.
Shui On Land: Disposed Shanghai property subsidiary at RMB1.7bn in Dec 2015 and Wuhan Tiandi commercial properties at RMB4.5bn in May 2016.
Possible Actions: These companies may exit property developments, pay high dividends, or go private.

Key Companies and Their Performance

1. COLI (688 HK)

Rating: Buy
Current Price: HK$23.05
Target Price: HK$28.20
Upside: 22%
NAV Discount: 26%
P/B: 1.1x
Dividend Yield: 2.8%

2. CR Land (1109 HK)

Rating: Buy
Current Price: HK$17.30
Target Price: HK$23.80
Upside: 38%
NAV Discount: 43%
P/B: 0.9x
Dividend Yield: 2.7%

3. Shimao Prop (813 HK)

Rating: Buy
Current Price: HK$9.61
Target Price: HK$14.00
Upside: 46%
NAV Discount: 66%
P/B: 0.5x
Dividend Yield: 9.4%

4. Agile Property (3383 HK)

Rating: Buy
Current Price: HK$3.92
Target Price: HK$4.60
Upside: 17%
NAV Discount: 66%
P/B: 0.4x
Dividend Yield: 4.4%

5. Yuzhou (1628 HK)

Rating: Buy
Current Price: HK$2.11
Target Price: HK$2.60
Upside: 23%
NAV Discount: 68%
P/B: 0.7x
Dividend Yield: 9.1%

6. CM Land (978 HK)

Rating: Buy
Current Price: HK$1.10
Target Price: HK$1.50
Upside: 36%
NAV Discount: 54%
P/B: 0.8x
Dividend Yield: 1.4%

7. Yuexiu Property (123 HK)

Rating: Buy
Current Price: HK$0.92
Target Price: HK$1.39
Upside: 51%
NAV Discount: 80%
P/B: 0.3x
Dividend Yield: 3.9%

8. Greentown (3900 HK)

Rating: Neutral
Current Price: HK$5.30
Target Price: HK$6.70
Upside: 26%
NAV Discount: 68%
P/B: 0.4x
Dividend Yield: 4.7%

9. Country Garden (2007 HK)

Rating: Neutral
Current Price: HK$3.15
Target Price: HK$3.00
Upside: -5%
NAV Discount: 38%
P/B: 0.8x
Dividend Yield: 5.4%

Non-Property-Focused Companies

1. CIMC (2039 HK)

Land Site: Awaiting approval for Shenzhen Shekou land use change.
Potential Value: RMB22.5bn or HK$8.4/share, about 88% of current share price.
Current P/B: 1.0x
Current Dividend Yield: 2.8%

2. KB Laminates (1888 HK)

Landbank Size: 1.78mn sqm of landbank assets.
Shenzhen Disposal: Sold 390k sqm property project to Evergrande (3333 HK) for HK$2.4bn.
Current P/B: 0.4x
Current Dividend Yield: 5.2%

Key Investment Themes

M&A Opportunities: Developers are looking to capture M&A opportunities and expand in urban redevelopment.
Urban Redevelopment: A growth driver for the sector, with companies like COLI and CR Land focusing on this area.
Asset Turnover: Companies are actively selling non-core assets to improve asset turnover and ROE.
Distressed Valuation: Attractive valuation for asset restructuring and delisting.
Special Dividends: Expected to be paid after the disposal of non-core assets.

Figures and Data

Figure 1: Developers' FY16E P/B ratio.
Figure 2: Developers' FY16E dividend yield.
Figure 3: Shimao's completed rental properties.
Figure 4: Shimao's completed hotel properties.
Figure 5: Sector's discount to NAV band.
Figure 6: Developers' core profit growth.
Figure 7: Shimao's financials.
Figure 8: Agile's completed rental properties.
Figure 9: Agile's completed hotel properties.
Figure 10: Agile's discount to NAV band.
Figure 11: CIMC's financials.
Figure 12: Skyworth's Shiyan land site.
Figure 13: Skyworth's production plant site and TV production capacity.
Figure 14: KB Laminates' financials.

Conclusion

The report highlights the potential for privatization and asset restructuring in the China property sector, driven by distressed valuations and attractive yields. Developers are actively selling non-core assets to improve financial metrics, and non-property-focused companies are also engaging in land site disposals. The report provides detailed financial analyses and investment themes for several companies, with a focus on improving ROE, asset turnover, and shareholder returns through these strategies.

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