20180822-兴业金融证券-碧桂园-02007.HK-Re-Accumulate_Opportunity_In_Blue-Chip_Developer_14页_646kb

报告摘要

Country Garden Summary

Core Content

Country Garden is one of China's largest property developers, with a strong presence in both domestic and international markets. Founded in 1992, the company has expanded across major regions in China and also has projects in Malaysia and Australia. It has 1,468 projects under development, demonstrating its extensive landbank and operational scale.

Main Points

Stock Recommendation: The analysts reiterate a BUY recommendation, with a new target price of HKD23.00, based on a 15% discount to its end-FY18F ENAV of HKD26.70.
Upside Potential: The estimated return is 88%, highlighting significant growth potential.
Current Price: The stock price is HKD12.20, and the market cap is USD33,817m.
Liquidity and Debt: Country Garden has CNY200bn in cash, which covers its debt maturing in 2H18 and FY19. Its net debt to equity ratio is 59%, indicating a strong financial position.
Growth Strategy: The company targets first-time home buyers and spillover demand in satellite cities, which helps in managing policy risks and inventory issues.
Growth Projections: Country Garden is expected to achieve a stable 30% CAGR in contracted sales from FY17 to FY20, and it is projected to reach CNY800bn in contracted sales for FY18F.
Profitability: The GPM (Gross Profit Margin) for 1H18 was 26.5%, up from 22% in 1H17. Recurring net profit increased by 80.1% YoY, surpassing expectations.
Dividend Yield: The dividend yield is expected to increase from 5.4% in FY18F to 7.8% in FY20F, reflecting a growing commitment to shareholder returns.
ROE: The ROEs for FY18F to FY20F are expected to range from 30% to 36%, indicating strong profitability.
Shareholder Structure: The Yang family holds 56.7% of shares, while Ping An Insurance holds 9.0%.
Free Float: The free float is 34%, suggesting a relatively concentrated ownership structure.

Key Financial Highlights

Recurring EPS: Increased from 0.54 in Dec-16 to 1.61 in Dec-18F, with a 46.5% growth in FY18F.
DPS (Dividend per Share): Rose from 0.17 in Dec-16 to 0.57 in Dec-18F, with a 77.4% increase YoY.
BVPS (Book Value per Share): Increased from 3.18 in Dec-16 to 4.869 in Dec-18F, showing strong asset growth.
Net Debt: Rose from CNY39,706m in Dec-16 to CNY108,149m in FY20F, reflecting increased leverage.
Operating Profit: Showed 164.4% growth in 1H18, indicating strong operational performance.

Valuation Metrics

Recurring P/E: Decreased from 19.7 in Dec-16 to 6.6 in Dec-18F.
P/B: Decreased from 3.36 in Dec-16 to 1.84 in Dec-18F.
EV/EBITDA: Decreased from 10.4 in Dec-16 to 5.3 in Dec-18F.
FCF Yield: Increased from 15.5% in Dec-16 to 32.0% in Dec-18F.

Key Drivers

Strong Contracted Sales Growth Momentum: Country Garden is expected to maintain a 30% CAGR in sales.
Improving Profit Margins: Gross margin has improved to 26.5% in 1H18, with recurring net profit margin also showing improvement.

Key Risks

Slowdown in Tier-3 Cities: The property market slowdown in Tier-3 cities could negatively impact growth.
Policy Changes: Potential changes in credit conditions and redevelopment policies might affect sales and profitability.

Peer Comparison

Company	Stock Code	Price (HKD)	Market Cap (USDm)	3-mth Avg Turnover (USDm)	RHB/Cons (USDm)	Discount (%)	P/E (FY18F)	P/E (FY19F)	EPS YoY (FY18F)	EPS YoY (FY19F)	3-yr EPS CAGR	P/BV (FY18F)	P/BV (FY19F)	Dividend Yield (FY18F)	Dividend Yield (FY19F)
Large Peer Average	-	-	-	-	-	-	37.3	7.5	6.0	18.8	25.3	1.7	1.4	5.2	5.9
China Vanke	2202 HK	25.90	38,300	32.5	33.34	22.3	7.1	5.8	24.7	22.9	20.1	1.6	1.4	5.0	6.2
Country Garden	2007 HK	12.24	33,818	109.4	26.70	54.2	6.7	5.1	36.3	32.7	29.9	1.9	1.5	5.0	6.5
Evergrande	3333 HK	28.40	47,168	98.1	42.20	32.7	8.2	6.9	-1.0	-	19.8	2.3	2.0	7.6	7.2
China Overseas	688 HK	24.10	33,638	58.8	43.00	44.0	6.6	5.5	17.4	18.8	17.5	0.9	0.8	3.9	4.6

Summary of Financials

Revenue Growth: Increased from 35.2% in FY16 to 54.8% in FY18F.
Recurring EPS Growth: Increased from 20.8% in FY16 to 46.5% in FY18F.
Gross Margin: Improved to 26.5% in 1H18.
Net Margin: Improved to 9.8% in 1H18.
Operating Margin: Improved to 20.0% in 1H18.

Analysts

Toni Ho, CFA: +852 2103 5888 | toni.ho@rhbgroup.com
Angelo Wong: +852 2103 9218 | angelo.wong@rhbgroup.com

Conclusion

Country Garden is viewed as a blue-chip developer with a strong recurring earnings growth and financial stability. The analysts believe the current discount presents a buying opportunity, especially given the limited impact of Tier-3 city slowdowns on the company's performance. The revised target price and increased earnings forecasts further support the BUY recommendation, despite the downside risk of a faster slowdown in Tier-3 markets.