20140725-Maybank_KERPL-More_room_to_go__U_G_to_BUY_11页_1mb

报告摘要

Country Garden (2007 HK) Summary

Core Content

Country Garden is a real estate company based in China, with a current share price of HKD3.77 and a target price of HKD4.60, implying a 22% potential upside. The company's market capitalization is USD9.3B, and its average daily trading volume is USD17M. The stock is currently trading at a 43% discount to its net asset value (NAV) of HKD6.60/share. It has a 5.0x FY15 PER and 1.0x FY15 P/BV. The net dividend yield for next year is expected to be 7.2%, which is below historical averages.

Main Views and Key Information

Stock Recommendation: The stock has been upgraded from HOLD to BUY, with an unchanged target price of HKD4.60.
Performance: The share price has declined by 19% year-to-date (YTD), but the company's operations and management are showing positive trends.
Sales and Profitability: The company expects strong sales in September and October, with a 3% reduction in core profit for 2014 due to margin adjustments. July project launches in Zhejiang Haining, Luoyang, and Nantong had sell-through ratios of ~80%, which are encouraging. However, July sales are expected to be flat compared to June (CNY9.1b).
Operational Improvements: The "Three Elites" program is aimed at improving operations by sending top sales teams to underperforming projects and replacing the bottom 30% of sales performers with new hires from competitors and other sectors. This is expected to have a positive impact next year.
Overseas Exposure: The management's goal of limiting overseas assets to a maximum of 10% in five years has reduced operational risks, especially following poor sales in Malaysia.
Financial Metrics:
- Revenue: Expected to grow from CNY41,891.0 in FY12A to CNY110,754.8 in FY16E.
- Core Net Profit: Projected to increase from CNY6,712.7 in FY12A to CNY13,436.1 in FY16E.
- Core FDEPS: Expected to grow from CNY0.37 in FY12A to CNY0.70 in FY16E.
- EBITDA: Forecasted to rise from CNY11,967.8 in FY12A to CNY22,474.2 in FY16E.
- Profit Margins: Gross margin is expected to remain stable, with EBIT margin decreasing slightly, while net margin is projected to decline from 16.7% to 12.1%.
- Dividend Yield: The net dividend yield is expected to increase from 4.6% to 8.4% over the forecast period.
- Valuation Ratios:
  - Core FD P/E: Expected to decrease from 8.1x in FY12A to 4.3x in FY16E.
  - P/BV: Projected to fall from 1.4x in FY12A to 0.8x in FY16E.
  - EV/EBITDA: Expected to decrease from 6.7x in FY12A to 4.6x in FY16E.
Key Risks: Potential for faster margin and leverage deterioration than expected, unfavourable macroeconomic developments, and unexpected management changes.

Key Data

Metric	Value
52-week high/low (HKD)	5.71/2.85
3-month average turnover (USDm)	17.2
Free float (%)	35.3
Issued shares (m)	19,080
Market capitalization	HKD71.9B
Major Shareholders:
- Yang Huiyan	59.4%
- Yang Erzhu	5.3%
- na	na

Valuation Table

Metric	2014E	2015E	2016E
Core FD P/E (x)	6.0	5.0	4.3
P/BV (x)	1.1	1.0	0.8
Net dividend yield (%)	6.0	7.2	8.4
EV/EBITDA (x)	5.9	5.1	4.6

Financial Ratios

Ratio	2011	2012	2013	2014E	2015E	2016E
Gross Margin (%)	34.5%	36.6%	30.3%	28.5%	29.1%	30.1%
EBIT Margin (%)	27.5%	27.7%	20.2%	19.2%	19.5%	19.9%
Net Margin (%)	16.7%	16.4%	13.6%	11.6%	11.5%	12.1%
ROA (%)	6.2%	5.6%	5.2%	4.5%	4.8%	5.0%
ROE (%)	21.4%	20.2%	19.9%	20.4%	21.0%	21.3%

Share Price Performance

Period	Absolute (%)	Relative to index (%)
1 Month	27.8	21.1
3 Months	16.7	9.1
12 Months	(10.5)	(18.5)

Key Financial Forecasts

Metric	FY12A	FY13A	FY14E	FY15E	FY16E
Revenue (CNY m)	41,891.0	62,701.9	82,965.5	99,536.8	110,754.8
Gross Profit (CNY m)	15,339.5	18,968.6	23,666.4	28,982.7	33,367.2
EBITDA (CNY m)	11,967.8	13,090.0	16,323.5	19,800.0	22,474.2
Core Net Profit (CNY m)	6,712.7	8,119.1	9,637.7	11,450.2	13,436.1
Core FDEPS (CNY)	0.37	0.44	0.51	0.60	0.70
Net DPS (CNY)	0.14	0.17	0.18	0.22	0.25