20140318-Maybank_KERPL-Stable_GPM_outlook___lower_gearing_13页_236kb

报告摘要

Company Overview: KWG Property is a Hong Kong-listed real estate developer in China, with a current share price of HKD3.61 and a target price of HKD5.30, indicating a potential increase of +47%.
Market Cap and Trading Activity: The company has a market capitalization of USD1.3 billion and an average daily trading volume (ADTV) of USD2 million.
Valuation: KWG is trading at approximately a 60% discount to its net asset value (NAV) of HKD9.6 per share, with a 3x FY14 forward price-to-earnings (PER) ratio and under 0.5x forward price-to-book value (P/BV) ratio. These valuations are considered very cheap.
Dividend Yield: KWG's dividend yield is attractive, with a net dividend yield of 10.1% in 2013, expected to be 8.4% and 10.5% in 2014 and 2015, respectively.
Earnings Growth: The company is forecasted to achieve a 20.4% YoY growth in core profit for 2014 and 24.4% for 2015, indicating a positive earnings outlook.

Core Profit: KWG's FY13 core profit of CNY2.3 billion was in line with Bloomberg consensus and slightly above the analysts' expectation.
Gross Margin (GPM): GPM for FY13 was 36.2%, aligning with Bloomberg consensus, while Country Garden and COLI's GPMs declined.
Revenue: Revenue for FY13 was CNY9.47 billion, down 2% YoY and 20% below Bloomberg's consensus estimate.
GFA Delivery: GFA delivery was 1.03 million square meters, in line with management's guidance of 1.0 to 1.1 million square meters.
Segment Performance:
- Property development revenue: CNY8,977 million, down 4% YoY.
- Property investment: CNY145 million, with flat performance.
- Hotel operations: CNY203 million, up 142% YoY due to the contribution of the W Hotel in Guangzhou.
- Property management fees: CNY143 million, up 20% YoY.

SG&A: SG&A as a percentage of contract sales declined to 6.2% from 7.3% in 2012.
Taxes: Income tax expenses dropped by 28% YoY to CNY955 million, attributed to a lower margin product mix.
Net Gearing: Net gearing decreased from 72.2% in June 2013 to 56.4% in December 2013, a positive development for the company's financial health.
Dividend Payout: The 2013 dividend payout ratio was 36%, significantly higher than the sector average, but not expected to be sustainable.

Pre-Sales Target: KWG aims for CNY21 billion in pre-sales for 2014, up 29% YoY, despite a lower sell-through ratio.
New Projects: The company is expected to launch 10 new projects in 2014, up from 6 in 2013, which could increase the number of available-for-sale properties.
GPM Guidance: KWG guided for stable GPMs in 2014 and 2015, with our forecasts at 36.5% and 36.9%, respectively.
Execution Risk: The company's ability to maintain its project launch schedule and manage landbanking and margins will be critical to its performance in 2014.

Discount to NAV: KWG's share price is trading at a 63% discount to its NAV, indicating significant undervaluation.
Valuation Metrics:
- Core FD P/E: 3.0x for FY14 and 2.4x for FY15.
- P/BV: 0.4x for FY14 and FY15.
Upside Potential: The valuation suggests over 40% upside potential to the target price of HKD5.30.
Risk Factors: Potential risks include stricter implementation of China's austerity measures, worse-than-expected execution, and slower pre-sale permit granting.

Sector Comparison:
- Dividend Yield: KWG's dividend yield is among the highest in the sector, with a 10.1% yield in 2013.
- PER: KWG's PER is significantly lower than peers like Agile and Country Garden, indicating a more attractive valuation.
- P/BV: KWG's P/BV is also lower than many peers, suggesting a discount to book value.
Performance: KWG's share price performance has been relatively negative compared to the market, but its valuation remains attractive.

Investment Recommendation: Maintain a BUY recommendation with an unchanged target price of HKD5.30, based on the company's strong financial position, stable GPM outlook, and attractive dividend yield.
Key Drivers: The company's ability to maintain its project launch schedule, manage landbanking, and maintain margins will be crucial for future performance.
Valuation Justification: The current valuation is seen as very cheap, with a significant discount to NAV and low PER and P/BV ratios, making it an attractive investment opportunity.

展开完整摘要