20211020-招银国际-中国海外发展-00688.HK-3Q21_results_slightly_beat__potential_re-rating_on_anti-cycle_land_acquisitions_5页_1mb

报告摘要

CMB International Securities | Equity Research | Company Update Summary

Core Content

Company: COLI (688 HK)
Research Rating: BUY (Maintain)
Target Price: HK$30.49
Current Price: HK$17.38
Upside Potential: +75.4%
Analysts: Jeffrey Zeng, Xiao Xiao

This report provides an update on COLI's performance and outlook for the third quarter of 2021 and the full year. It highlights the company's financial results, strategic land acquisition moves, and valuation attractiveness.

3Q21 Results

Revenue: RMB43.2bn, up 46% YoY, slightly better than expected.
Operating Profit: RMB8.0bn, up 6% YoY, recovering from 1H21 flat growth.
Operating Margin: 18.5%, down 7ppt YoY, in line with 1H21 and industry trend.
9M21 Performance:
- Revenue: RMB151.1bn, up 28% YoY
- Operating Profit: RMB39.4bn, up 1% YoY
- Operating Margin: 26.1%, down 6.7ppt YoY
Net Gearing: Increased to 35.6% in 9M21 from 33.8% in 1H21 due to aggressive land acquisitions.
Cash Balance: Remained largely unchanged at RMB116bn.

Land Acquisition Strategy

Anti-Cycle Land Acquisitions: COLI has capitalized on the weak land market, with land premium and unsuccessful rate at record lows in September 2021 (4% and 27% respectively).
Land Acquisitions in 3Q21: COLI spent RMB46bn on land in the second batch of land supply, focusing on core Tier 1-2 cities at RMB13,000/sq m.
Estimate for GP Margin: Expected to be above 30% for the 19 plots acquired in September 2021, indicating margin recovery.
Future Plans: COLI has a RMB60bn budget for land acquisitions in the third round of land supply, which could support more sustainable margin growth.

Earnings Visibility and Outlook

Sales Target for 2021E: RMB400bn, with 69% completion rate in 9M21 (vs. industry at 66%).
Sales Growth: Double-digit growth is achievable in 2021, as per its 14th 5-year plan.
Profitability Improvement: Expected due to anti-cycle land acquisitions and a less competitive land market.
Earnings Growth: 10% YoY growth in earnings is projected.

Valuation

PE Ratio (2021E): 3.9x, significantly below the historical average of 6.3x and 1SD below the average of 5.4x.
Dividend Yield: 8%, which is higher than the historical average.
Valuation Attractiveness: High earnings visibility and low valuation make the stock attractive, leading to a "BUY" recommendation.

Key Financial Highlights

Metric	FY18A	FY19A	FY20A	FY21E	FY22E
Revenue (RMB mn)	144,027	163,651	185,790	221,386	252,305
Net Income (RMB mn)	37,716	41,618	43,904	45,979	52,352
EPS (RMB)	3.44	3.80	4.01	4.20	4.78
P/E (x)	6.1	5.5	4.2	4.0	3.7
P/B (x)	0.9	0.8	0.7	0.6	0.6
Yield (%)	4.3	5.5	8.0	6.9	7.8
ROE (%)	15.2	14.8	14.0	13.0	13.2
Net Gearing (%)	32.5	32.7	32.6	29.8	25.7

Shareholding and Performance

Shareholding Structure:
- CTCEC: 56.0%
- Free float: 44.0%
Share Performance (12-mth): -11.5% (Absolute), -2.2% (Relative)

Key Ratios

Ratio	FY18A	FY19A	FY20A	FY21E	FY22E
Gross Margin (%)	37.8	33.7	30.0	32.5	32.6
Pre-tax Margin (%)	35.2	32.0	35.1	31.8	31.6
Net Margin (%)	26.2	25.4	23.6	20.8	20.7
Effective Tax Rate	35.6	34.2	31.1	33.6	33.6
Net Gearing (%)	32.5	32.7	32.6	30.1	25.8
ROE (%)	15.2	14.8	14.0	13.0	13.2
ROA (%)	5.9	5.7	5.3	5.3	5.5
EPS (RMB)	3.44	3.80	4.01	4.20	4.78
DPS (HK$)	0.90	1.02	1.18	1.45	1.65
BVPS (RMB)	22.61	25.61	28.67	32.25	36.28

Main Points and Key Information

Strong 3Q21 Performance: COLI's revenue and operating profit growth exceeded expectations, driven by increased land acquisitions.
Strategic Land Acquisition: COLI is leveraging the weak land market to acquire land at lower premiums, focusing on core Tier 1-2 cities.
Earnings Growth Potential: COLI is expected to achieve its 2021E sales target and maintain strong earnings growth due to its land strategy.
Valuation: The stock is undervalued based on current earnings and dividend yield, making it an attractive investment.
Recommendation: "BUY" with a target price of HK$30.49, indicating a potential return of over 75%.

CMBIS Ratings

BUY: Potential return of over 15% over the next 12 months.
HOLD: Potential return of +15% to -10% over the next 12 months.
SELL: Potential loss of over 10% over the next 12 months.
OUTPERFORM: Industry expected to outperform the relevant broad market benchmark.
MARKET-PERFORM: Industry expected to perform in-line with the relevant broad market benchmark.
UNDERPERFORM: Industry expected to underperform the relevant broad market benchmark.

Important Disclosures

The report is not tailored to individual investors.
Past performance does not guarantee future results.
The information is based on publicly available data and may be subject to change.
CMBIS may have conflicts of interest and is not liable for any reliance on the report.
The report is intended for specific investors and may not be distributed to others without consent.

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