20170413-招商证券_香港_-China_Property__More_cautions_warranted_16页_1mb_1mb

报告摘要

China Property Industry Report Summary

Core Content

This report provides an analysis of the China property market, highlighting the challenges and opportunities in the sector during the second and third quarters of 2017. It outlines the impact of tightening policies on market dynamics, developer profitability, and stock performance, while also identifying preferred stock picks based on financial resilience and operational efficiency.

Main Points

Market Complacency and Caution: The market has been complacent about the growth in developers' contract sales and profit margin recovery, but the report suggests a more cautious outlook due to the sharp slowdown in transaction volume and the rise in land prices.
Policy Tightening: The tightening measures are more comprehensive and harsher than previous cycles, affecting both top-tier and lower-tier cities. Policies include home purchase restrictions, higher mortgage down payments, and stricter presale permit controls.
Transaction Volume Decline: Transaction volume in 38 major cities declined sharply in April 2017, with a 35% YoY drop. The report expects a national decline in residential GFA sold to turn negative in 2Q/3Q17E, reaching -9% to -12% YoY.
Profitability Concerns: Despite lower inventory levels offering price cushions, rising land prices are expected to narrow developers' gross profit margins from 29% in FY16 to 22% in FY18/19E.
Stock Picks: The report recommends Longfor and COLI due to their strong recurring rental income, low leverage, and effective cost management. Country Garden is rated as Neutral due to fair valuation.

Key Information

Financials Summary

Company	Ticker	Rating	Current Price (HK$)	Target Price (HK$)	Upside (%)	17E P/E	18E P/E	19E P/E	17E Yield (%)	18E Yield (%)	19E Yield (%)
COLI	688 HK	Buy	22.95	25.43	11%	7.4	6.6	6.1	4.1	4.6	5.0
Longfor	960 HK	Buy	13.44	15.15	13%	7.6	6.8	6.0	4.7	5.4	6.4
Country Garden	2007 HK	Neutral	7.54	6.63	-12%	10.1	7.5	6.0	3.5	4.6	5.8
Vanke*	2202 HK	N-R	21.1	N/A	N/A	8.2	7.1	6.5	5.1	5.8	6.2
CRLand*	1109 HK	N-R	22.35	N/A	N/A	8.1	7.0	6.3	3.5	4.1	4.7
Agile*	3383 HK	N-R	6.75	N/A	N/A	6.7	5.9	5.1	5.9	6.5	7.5
Shimao*	813 HK	N-R	12.84	N/A	N/A	5.8	5.1	4.5	6.0	6.8	7.9
Yuzhou*	1628 HK	N-R	3.41	N/A	N/A	4.8	4.0	3.3	7.4	9.0	10.7

Sales Volume Forecast

Nation-wide: -6.2% YoY in 2017E.
Tier-1 cities: -12% YoY in 1Q17E, expected to stabilize in 4Q17E.
Tier-2 cities: -5% YoY in 1Q17E, decline to -15% in 2Q/3Q17E.
Tier-3 cities: +5% YoY in 1Q17E, expected to decline to -5% to -10% in 2Q/3Q17E.

Profitability Analysis

Gross Profit Margins: Expected to narrow from 29% in FY16 to 22% in FY18/19E.
Land Prices: Rising land premiums over starting bids are a key factor in reducing profitability, with the average GPM for new projects at 21.5% in 2017.

Recurring Rental Revenue

Longfor: Has the highest proportion of revenue from recurring sources, with a 57% growth in rental GFA over 5 years and an estimated 15% CAGR in rental revenue from 2016 to 2019E.
Recurring Revenue Coverage: Over 73% of dividend payments are expected to be covered by recurring rental revenue by 2017/18E, up from 64% in FY14.

Cost Management

COLI: Lowest SG&A expenses to sales ratio at 3.1%, significantly lower than industry peers.
Longfor: SG&A expenses at 3.9% in 2016, expected to be managed at 2.8% and 2.7% in 2017/18E.

Capital Management

COLI: Lowest gearing ratio at 7.5%, with net gearing expected to remain at 32% in 2017E and 39% in 2018E.
Longfor: Higher gearing ratio at 70% in 2017E, expected to decrease to 53% in 2018E.

Conclusion

The China property market is facing significant challenges due to tighter policies and a slowdown in transaction volume. Developers must navigate these conditions with strong recurring income, effective cost management, and healthy capital structures. Longfor and COLI are highlighted as preferred picks due to their resilience and strategic advantages in the current market environment.

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