20210831-华盛证券-朗诗地产-00106.HK-Stable_Growth_5页_326kb

Landsea Green Properties (106.HK) Investment Summary

Core Content

Landsea Green Properties (106.HK) is a real estate company established on December 24, 2001, with its headquarters located in Clarendon House 2, Church Street, Hamilton HM 11, Bermuda. The company is chaired by TIAN Ming and has a total of 1,614 employees. The company operates both in the PRC and the U.S., with a diversified business model that includes real estate development, property investment, and the Development Service segment.

Key Financial Highlights (1H21)

• Total Revenue: RMB 4.64 billion (on and off-balance sheet), down from RMB 5.5 billion in the previous year.
• Gross Profit: RMB 1.043 billion, a decrease of 1.13% YoY.
• Core Net Profit: RMB 132 million, up 29.5% YoY.
• Development Service Segment:
  • Revenue increased by RMB 404 million (17.1% YoY), reaching RMB 909.3 million.
  • Revenue share rose from 29% to 46% of total revenue.
  • Gross margin remained strong at 57%.
• PRC Real Estate Segment:
  • Gross margin increased to 33.1%, up 7% YoY.
  • Landsea has expanded the Ark of Freedom brand to 6 cities with 3,732 housing units.
  • Green-building branding has contributed to a price premium of RMB 3,000 to RMB 6,000 per square meter.

Investment Highlights

• Stable Growth: The company reported a 81.6% YoY increase in contracted sales (RMB 23.4 billion) and a 101.1% YoY increase in constructed area (1.48 million sqm).
• Asset-Light Strategy: Maintained an average 52% equity interest in new real estate development projects.
• Segment Growth: The U.S. segment saw significant growth, with on and off-balance sheet revenue increasing by 62.7% in 1H21.

Valuation Analysis

• Valuation Method:
  • PRC Real Estate Segment: Estimated at HKD 961.7 million (2021E) and HKD 1.052 billion (2022E) using 5 times P/E multiples.
  • Landsea Homes (U.S. listed): Estimated at HKD 1.098 billion (2021E) and HKD 1.098 billion (2022E) after a 50% discount.
  • Development Service Segment: Estimated at HKD 2.227 billion (2021E) and HKD 3.254 billion (2022E) using 10 times P/E multiples.
• Total Valuation:
  • HKD 4.287 billion (2021E) and HKD 5.404 billion (2022E).
  • Corresponding EPS: HKD 0.91 (2021E) and HKD 1.14 (2022E).

Forecasted Financials (2021E and 2022E)

Investment Rating

• Rating: BUY
• Reasoning: Despite some declines in PRC real estate revenue, the company demonstrates strong growth in the Development Service segment, a solid asset-light strategy, and a diversified business model. The valuation analysis supports a BUY rating based on projected earnings and growth potential.

Risks

• Development Service and minority interest performance below expectations.
• Potential impact from government policy changes on the real estate sector.
• Uncertainty due to the ongoing effects of the Covid-19 pandemic on the U.S. listed Landsea Homes.

Disclaimer

This report is prepared by Valuable Capital Limited, a regulated securities firm in Hong Kong. The views expressed in this report are those of the analysts and do not constitute a recommendation, investment advice, or an offer to sell or buy any securities. The report is for informational purposes only, and no liability is accepted for any loss or damage arising from its use.

Analyst Statement

• The report is based on the analysts' personal views.
• No part of the analyst's compensation is directly or indirectly linked to the specific recommendations or views in this report.
• The analyst has not received insider information that could affect the report's content.
• The analyst and related parties do not hold any equity in the securities mentioned.
• The analyst is not an executive of the listed companies mentioned.