20210823-招银国际-中国奥园-03883.HK-1H21_results_miss__2H21_needs_to_speed_up_4页_788kb

CMB International Securities | Equity Research | Company Update Summary

Core Content Overview

China Aoyuan (3883 HK) reported 1H21 results that missed expectations, with core earnings declining by 12% YoY to RMB2.16bn. The company's revenue grew by 15% YoY, driven by strong performance in the hotel and property management (PM) segments, which saw a 109% increase. However, the gross profit margin (GPM) dropped to 25.0% from 29.3% in 1H20, leading to a decline in net margin by 2.1ppt to 6.4%. The company also decided not to declare an interim dividend, consistent with its 1H20 decision.

The stock is currently trading at 0.7x 2020 PB, which is historically low, and the research firm maintains a BUY rating with a target price of HK$15.48, implying a potential return of +207.1% from the current price of HK$5.04.

Key Financial Highlights

• Revenue Growth:
  • 1H21: 15% YoY growth (RMB32,510m)
  • FY21E: 16.7% YoY growth (RMB96,702m)
  • FY22E: 21.9% YoY growth (RMB117,850m)
• Net Profit:
  • 1H21: RMB2,089m (-14% YoY)
  • FY21E: RMB7,399m
  • FY22E: RMB8,720m
• EPS:
  • 1H21: RMB0.77/share (-14% YoY)
  • FY21E: RMB2.75
  • FY22E: RMB3.24
• P/B Ratio: 0.6x (FY21E), 0.5x (FY22E)
• ROE:
  • 1H21: 6.4%
  • FY21E: 31.6%
  • FY22E: 30.4%

Balance Sheet Stability

• Net Gearing: 80.7% in 1H21 (vs. 82.7% in 1H20), indicating a stable financial position.
• Unrestricted Cash/ST Debt: 1.2x in 1H21 (vs. 1.0x in 1H20)
• Debt to Asset Ratio (excl. pre-sales): 78.5% in 1H21 (vs. 78.4% in 1H20), maintaining a yellow category status.
• Total Debt: RMB111bn in 1H21, a 2% decline from FY20.

Land Acquisition Strategy

• Aoyuan spent RMB6.5bn on land acquisitions in 1H21, which is only 10% of sales, due to a cautious approach to the land market.
• The company is focusing more on urban renewal to acquire cheaper land, having converted 3 plots in 1H21.

Growth Strategy for 2H21

• The company plans to strengthen sales, monitor collection rates, and speed up delivery in the second half of 2021.
• It will continue to reduce the overall debt scale.

Shareholding and Market Performance

• Shareholding Structure:
  • GUO ZI WEN: 55.3%
  • Free float: 44.7%
• Share Performance:
  • 1-mth: -11.3%
  • 3-mth: -31.5%
  • 6-mth: -22.2%
  • 12-mth: -42.4%

CMBIS Ratings

• BUY: Potential return of over 15% over the next 12 months.
• HOLD: Potential return of +15% to -10%.
• SELL: Potential loss of over 10%.
• NOT RATED: Not rated by CMBIS.

Industry Outlook

• OUTPERFORM: Industry expected to outperform the broad market benchmark.
• MARKET-PERFORM: Industry expected to perform in-line with the broad market benchmark.
• UNDERPERFORM: Industry expected to underperform the broad market benchmark.

Financial Summary

• Current Ratio: 1.4x (FY18A), 1.3x (FY19A), 1.3x (FY20A), 1.3x (FY21E), 1.2x (FY22E)
• Receivable Turnover Days: 144 (FY18A), 190 (FY19A), 146 (FY20A), 146 (FY21E), 146 (FY22E)
• Payables Turnover Days: 437 (FY18A), 379 (FY19A), 365 (FY20A), 365 (FY21E), 365 (FY22E)
• Inventory Turnover Days: 1,962 (FY18A), 1,634 (FY19A), 1,108 (FY20A), 1,031 (FY21E), 881 (FY22E)
• Net Debt / Total Equity Ratio: 70.2% (FY21E), 65.5% (FY22E)

Key Ratios

• Gross Margin: 28.4% (FY21E), 27.9% (FY22E)
• EBIT Margin: 19.7% (FY21E), 19.2% (FY22E)
• Net Margin: 7.7% (FY21E), 7.4% (FY22E)
• Effective Tax Rate: 48.4% (FY21E), 48.9% (FY22E)

Analyst Certification

• The analyst certifies that the views expressed accurately reflect their personal views and that no compensation is directly or indirectly related to the report's content.
• The analyst confirms they have not traded in the stock covered in the report within 30 days prior to its issue and will not do so within 3 business days after the issue.

Important Disclosures

• This report is for informational purposes only and should not be considered as investment advice.
• Past performance does not indicate future results.
• The value of investments is uncertain and may fluctuate.
• CMBIS is not liable for any loss or damage incurred from reliance on this report.
• The report may be subject to change without notice.
• CMBIS may have investment banking relationships with the companies mentioned and may have conflicts of interest.

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