20180305-CIMB_SECURITIES_SNG_-九龙仓置业-01997.HK-Retail_recovery_is_not_particularly_strong_11页_820kb
报告摘要
Summary of Wharf REIC Company Note (Hong Kong, March 5, 2018)
Core Content
This document provides an analysis of Wharf REIC's financial performance and outlook for the year 2018 and 2019. The company is currently rated Hold, with a consensus rating of 4 Buy, 7 Hold, and 0 Sell. The current price is HK$52.05, and the target price is HK$49.00, representing a 30% discount to NAV.
Key Financial Highlights
- FY17 Core Profit: Increased by 12% to HK$9.5bn, driven by higher property sales in China via its 71%-owned subsidiary HCDL. Excluding HCDL, core profit rose by 7% to HK$8.6bn.
- Dividend Payout: In 2H17, a final dividend of HK$0.95 was declared, based on a 65% payout on HK rental income (excluding hotels). Management expects this ratio to remain consistent.
- Retail Recovery: Retail rental income increased by 5% in FY17, but the recovery is not strong and has already been priced in. Retail sales grew by 9.1% and 1.1% in 2017, with an acceleration in 4Q17 to 17% and 9%.
- Market Valuation: The company's current valuation is considered fair. The discount to NAV is maintained at 30%, and the target price is adjusted to HK$49.00.
- Potential Acquisitions: Wharf REIC has a warchest of around HK$30bn in FY18, which may be used for acquisitions, but it is not sufficient for mega projects like Express Rail Link and Skycity.
- HCDL Privatisation: It is likely that HCDL will be privatised after the disposal of Suzhou IFS in 2Q-3Q18, which would help retain net cash and stakes in several hotels in HK and China.
Financial Forecasts
| Metric | Dec-16A | Dec-17A | Dec-18F | Dec-19F | Dec-20F |
|---|---|---|---|---|---|
| Total Net Revenues (HK$m) | 16,851 | 20,904 | 16,351 | 16,488 | 16,973 |
| Operating EBITDA (HK$m) | 13,211 | 23,568 | 12,550 | 12,724 | 13,078 |
| Net Profit (HK$m) | 9,727 | 17,482 | 9,198 | 9,296 | 9,555 |
| Normalised EPS (HK$) | 2.81 | 3.13 | 3.03 | 3.06 | 3.15 |
| Normalised EPS Growth | 0.5% | 11.5% | -3.2% | 1.1% | 2.8% |
| FD Normalised P/E (x) | 18.53 | 16.62 | 17.18 | 17.00 | 16.54 |
| DPS (HK$) | 0.00 | 1.91 | 1.95 | 1.99 | 2.05 |
| Dividend Yield | 0.00% | 3.67% | 3.75% | 3.82% | 3.93% |
| EV/EBITDA (x) | 15.98 | 13.12 | 16.07 | 15.66 | 14.97 |
| P/FCFE (x) | 10.21 | 20.42 | 17.79 | 18.63 | 16.22 |
| Net Gearing (%) | 14.8% | 19.9% | 18.3% | 16.9% | 15.1% |
| P/BV (x) | 0.79 | 0.76 | 0.75 | 0.74 | 0.73 |
| ROE | 4.22% | 4.68% | 4.40% | 4.38% | 4.43% |
Key Drivers and Risks
- Upside Risks: Faster-than-expected retail market recovery, and the disposal of Suzhou IFS.
- Downside Risks: Faster-than-expected US rate hikes and a correction in the HK/China economy.
Key Changes in This Note
- FY18F EPS decreased by 2%.
- FY19F EPS increased by 1%.
Share Price Performance
- 1M Return: -2.7%
- 3M Return: +5.2%
- Relative Return: +4.6% (1M), +1.6% (3M)
Major Shareholders
- Wheelock: Holds 62.0% of shares.
NAV and Valuation
- NAV (HK$): Estimated at HK$70.0, with a 30% discount to NAV.
- Target Price (TP): HK$49.00, adjusted from HK$48.00.
- NAV Breakdown:
- HK IP: Valued at HK$240,790m, contributing 95% to GAV.
- HK Hotel: Valued at HK$3,873m, contributing 2% to GAV.
- HCDL: Valued at HK$7,679m, contributing 3% to GAV.
- Gross Asset Value (GAV): HK$252,342m.
- Net Debt: HK$43m (Dec-17), expected to increase to HK$73m (Dec-18).
- Net Asset Value (NAV): HK$212,775m.
Peer Comparison
| Company | Share Price (HK$) | TP (HK$) | Rating | Mkt Cap (US$ m) | NAV/sh (HK$) | Upside (%) | P/E (x) | P/BV (x) | Yield (%) | Net Gearing (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| CK Asset | 66.15 | 85.0 | ADD | 31,226 | 122.0 | 46 | 28 | 9.6 | 0.9 | 13.1 |
| HLD | 50.15 | 67.0 | ADD | 25,618 | 96.0 | 48 | 34 | 11.0 | 0.8 | 14.2 |
| Kerry | 34.85 | 41.0 | ADD | 6,444 | 74.0 | 53 | 18 | 8.5 | 0.6 | 13.7 |
| NWD | 11.58 | 13.5 | ADD | 14,931 | 22.5 | 49 | 17 | 12.6 | 0.6 | 12.1 |
| SHKP | 127.30 | 180.0 | ADD | 47,081 | 257.0 | 50 | 41 | 10.1 | 0.7 | 15.3 |
| Sino | 13.84 | 18.2 | ADD | 11,394 | 25.0 | 45 | 20 | 7.8 | 0.7 | 13.1 |
| Wharf Holdings | 28.60 | 32.0 | ADD | 11,095 | 53.0 | 46 | 12 | 17.8 | 0.3 | 7.5 |
| Wheelock | 56.80 | 69.0 | HOLD | 14,806 | 115.0 | 51 | 21 | 9.6 | 0.5 | 15 |
| HLP | 18.50 | 16.0 | REDUCE | 10,623 | 32.0 | 42 | -14 | 3.1 | 0.6 | 30 |
| HKL* | 6.87 | 9.1 | ADD | 16,164 | 14.0 | 51 | 3.1 | 3.3 | 0.5 | 2 |
| Swire Ppt | 26.55 | 31.0 | ADD | 19,829 | 44.0 | 40 | 20 | 5.1 | 0.7 | 2.7 |
| Wharf REIC | 52.05 | 49.0 | HOLD | 20,176 | 70.0 | 26 | 18.1 | 17.8 | 0.8 | 3 |
Key Ratios
| Ratio | Dec-16A | Dec-17A | Dec-18F | Dec-19F | Dec-20F |
|---|---|---|---|---|---|
| Revenue Growth (%) | -4.1% | 24.1% | -21.8% | -0.8% | -2.9% |
| Operating EBITDA Growth (%) | 0.4% | 29.9% | -19.5% | -1.4% | -2.8% |
| Operating EBITDA Margin (%) | 71.2% | 74.6% | 76.8% | 77.2% | 77.0% |
| Net Cash Per Share (HK$) | -9.94 | -13.99 | -13.03 | -12.24 | -11.09 |
| BVPS (HK$) | 65.60 | 68.28 | 69.36 | 70.43 | 71.53 |
| Gross Interest Cover | 8.75 | 15.01 | 10.01 | 10.25 | 10.20 |
| Effective Tax Rate (%) | 15.9% | 19.0% | 18.0% | 17.7% | 17.7% |
| Net Dividend Payout Ratio (%) | NA | 61.1% | 64.4% | 65.0% | 65.0% |
| Accounts Receivables Days | 20.26 | 12.69 | 14.18 | 14.06 | 13.69 |
| Inventory Days | 0.95 | 0.93 | 1.40 | 1.42 | 1.37 |
| Accounts Payables Days | 656 | 680 | 1,024 | 1,040 | 1,006 |
| ROIC (%) | 213% | -115% | 1226% | 5024% | 16597% |
| ROCE (%) | 4.85% | 6.20% | 4.77% | 4.78% | 4.85% |
| Return On Average Assets | 3.76% | 4.10% | 3.74% | 3.72% | 3.79% |
Summary of Key Points
- Financial Performance: FY17 core profit was higher due to property sales in China, but the retail recovery is not strong.
- Dividend Policy: Dividend payout ratio remains consistent at 65%, but the recurring income base excludes hotel income.
- Valuation: The company's current valuation is considered fair, with a target price based on a 30% discount to NAV.
- Acquisitions: The warchest is not sufficient for large projects, and equity financing is not preferred.
- HCDL Privatisation: Likely to be privatised after Suzhou IFS disposal, which may help retain net cash and stakes in hotels.
- Risks: The company faces potential downside risks from US rate hikes and economic corrections in HK/China, while upside risks include faster retail recovery and successful disposal of Suzhou IFS.
This analysis provides a comprehensive overview of Wharf REIC's financial status and outlook, highlighting the key performance indicators, valuation metrics, and potential risks and opportunities.
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