20180327-兴业金融证券-中国海外发展-00688.HK-Steady_Growth_Story_Remains_Intact_13页_569kb
报告摘要
China Overseas Land & Investment (COLI) Summary
Core Content
China Overseas Land & Investment (COLI) is a leading property developer in China, a subsidiary of China State Construction Engineering Corporation. The company has a strong presence in 42 major cities, including Hong Kong and Macau, and is involved in property development, investment, management, and planning and construction design. COLI's FY17 results showed strong performance with recurring net profit reaching HKD34.3bn (+9.2% YoY), slightly below estimates, but with improved gross profit margin (GPM) at 32.9% and recurring net profit margin (NPM) at 20.6%. Despite a revenue miss, the company maintained strong margins and demonstrated efficient cost control, particularly in SG&A expenses.
Main Points
- Steady Growth: COLI is viewed as a low-risk growth story with the potential to maintain strong margins and accelerate earnings momentum in the medium to long term.
- Sales Targets: COLI announced a FY18F sales target of HKD290bn and saleable resources of HKD555bn, indicating strong growth momentum. New projects acquired in Q1 2018 are expected to become saleable by Q4 2018, potentially leading to upside surprises.
- Asset Turnover: Management is accelerating asset turnover, with the introduction of a new share option scheme to incentivize senior management. This is expected to enhance efficiency and performance.
- Valuation: The target price is set at HKD36.60 (35% upside from the current price of HKD27.10), based on a 15% discount to the end-FY18F ENAV of HKD43.00. This is an increase from the previous target of HKD32.10 and a 10% discount to ENAV.
- Financial Performance: COLI's recurring net profit is expected to grow from HKD31,370m in FY17 to HKD65,958m in FY20F, with a CAGR of 27.6% for contracted sales and an accelerating earnings growth rate.
- Margins: COLI's GPM is expected to remain resilient at 31.3–31.7% over FY18F–20F, and NPM is projected to stay at 19.0–19.2% due to effective cost control and management efficiency.
- Dividend Yield: The dividend yield is expected to rise from 2.8% in FY17 to 6.7% in FY20F, reflecting an increasing payout ratio and improved profitability.
- Downside Risk: The main downside risk is slower-than-expected revenue bookings, which could affect earnings growth.
Key Financials
| Metric | FY17 (HKDm) | FY18F (HKDm) | FY19F (HKDm) | FY20F (HKDm) |
|---|---|---|---|---|
| Total Turnover | 166,045 | 209,171 | 258,218 | 347,022 |
| Recurring Net Profit | 34,257 | 40,060 | 49,279 | 65,958 |
| Recurring Net Profit Growth | 9.2% | 16.9% | 23.0% | 33.8% |
| Recurring EPS | 3.13 | 3.66 | 4.50 | 6.02 |
| DPS | 0.80 | 0.91 | 1.35 | 1.81 |
| Recurring P/E (x) | 8.67 | 7.41 | 6.03 | 4.50 |
| P/B (x) | 1.12 | 1.01 | 0.92 | 0.82 |
| Net Debt to Equity (%) | 27.1 | 31.1 | 32.9 | 32.9 |
Key Risks
- Revenue Booking: The risk of slower-than-expected revenue booking could affect earnings growth.
- Market Conditions: While the company has a strong financial structure, the property market in China is subject to macroeconomic and regulatory changes.
Peer Comparison
| Company | Stock Code | Price (HKD) | Market Cap (USDm) | 3-Month Avg Turnover (USDm) | RHB/Cons (USDm) | Discount (%) | P/E (FY17) | P/E (FY18) | EPS YoY Change (FY17) | EPS YoY Change (FY18) | 3-Year EPS CAGR | P/BV (FY17) | P/BV (FY18) | Dividend Yield (FY17) | Dividend Yield (FY18) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Large Peer Average | - | - | - | - | - | 25.9 | 2.0 | 1.6 | 4.8 | 5.4 | - | - | - | - | - |
| Evergrande | 3333 HK | 25.20 | 42,314 | 74.0 | 42.20 | 40.3 | 13.3 | 6.7 | 96.6 | 15.0 | - | 2.2 | 1.9 | 9.2 | 8.1 |
| China Overseas | 688 HK | 27.10 | 37,841 | 90.8 | 43.00 | 37.0 | 7.3 | 7.2 | 6.2 | 8.4 | 1.6 | 1.0 | 0.9 | 3.7 | 4.3 |
| China Vanke | 2202 HK | 32.40 | 52,398 | 49.8 | 33.34 | 2.8 | 13.6 | 10.4 | 31.5 | 23.9 | 31.5 | 2.2 | 1.9 | 3.9 | 4.9 |
| Country Garden | 2007 HK | 16.10 | 44 | - | - | - | - | - | - | - | - | - | - | - | - |
Conclusion
COLI is expected to maintain its strong financial position and growth trajectory, supported by its efficient cost control, aggressive asset turnover, and strong management incentives. The company is recommended to be maintained as a BUY with a new target price of HKD36.60, reflecting a more optimistic outlook and valuation adjustments. The key risks include slower-than-expected revenue bookings and market conditions. Overall, COLI's strategic initiatives and financial performance position it well for continued growth and profitability in the property sector.
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