20180816-兴业金融证券-旭辉控股集团-00884.HK-Secular_Growth_Remains_Undimmed_12页_675kb
报告摘要
CIFI Summary
Core Content
CIFI is reaffirmed as the top pick among small-cap developers with a target price of HKD7.90, representing an 85% upside from the current price of HKD4.28. The analysis is based on a 25% discount to its end-FY18F ENAV of HKD10.50. The company is positioned to achieve strong secular growth and is expected to become a top-10 player in the industry by 2020.
Main Points
- Strong Performance: CIFI's 1H18 results showed a 59% YoY increase in core net profit, exceeding the forecast and the company's own profit alert.
- Gross Margin and Net Profit Margin: The GPM was maintained at 23.6%, while the core NPM increased to 13.3%, indicating effective cost control and profit management.
- Land Banking Strategy: CIFI has shifted focus to tier-2 and tier-3 cities to mitigate policy risks and is primarily using auctions rather than M&A for land acquisition, ensuring asset turnover and growth.
- Sales Growth: CIFI has a significant land bank with total GFA of 40.4m sqm, equivalent to CNY650bn in saleable resources. This is expected to support a 38.7% CAGR in contracted sales for FY17-20F.
- Financial Position: CIFI has a low financing cost of 5.3%, which is the lowest among small- and mid-cap developers, and is maintaining a prudent approach to land replenishment, leading to a reduction in net gearing.
- Dividend Yield and ROE: The dividend yield is projected to increase to 14.1% by 2020, and the return on average equity is expected to rise to 31.7%, reflecting strong profitability and shareholder returns.
Key Financial Forecasts and Valuations
| Metric | Dec-16 | Dec-17 | Dec-18F | Dec-19F | Dec-20F |
|---|---|---|---|---|---|
| Total Turnover (CNYm) | 22,224 | 31,824 | 51,697 | 70,165 | 91,817 |
| Reported Net Profit (CNYm) | 2,808 | 4,828 | 6,303 | 8,208 | 10,737 |
| Recurring Net Profit (CNYm) | 2,824 | 4,082 | 6,101 | 8,208 | 10,737 |
| Recurring Net Profit Growth (%) | 27.8 | 44.5 | 49.5 | 34.5 | 30.8 |
| Recurring EPS (CNY) | 0.42 | 0.58 | 0.86 | 1.16 | 1.52 |
| DPS (CNY) | 0.15 | 0.19 | 0.31 | 0.41 | 0.53 |
| Recurring P/E (x) | 8.90 | 6.51 | 4.36 | 3.24 | 2.48 |
| P/B (x) | 1.68 | 1.27 | 1.06 | 0.88 | 0.71 |
| Dividend Yield (%) | 4.0 | 5.0 | 8.3 | 10.8 | 14.1 |
| Return on Average Equity (%) | 20.2 | 26.9 | 27.5 | 29.7 | 31.7 |
| Return on Average Assets (%) | 3.6 | 4.0 | 3.2 | 3.1 | 3.5 |
| Net Debt to Equity (%) | 50.4 | 70.0 | 71.1 | 66.5 | 60.4 |
Key Risks
- Land Cost Surge: Possible increases in land costs could impact profitability.
- Slower Property Completion: A slower-than-expected property completion rate could affect earnings and growth projections.
Company Profile
- Founded: 2000 in Shanghai.
- Listing: November 2012.
- Focus: Mass and mid-end residential properties in China.
- Land Bank: Total GFA of 22.1m sqm, with exposure in 13 cities.
- Joint Ventures: Operates with Greenland and Henderson Land.
Share Data
- Avg Daily Turnover (HKD/USD): 125m/16.0m
- 52-wk Price Range (HKD): 4.00 - 7.53
- Free Float (%): 34
- Shares Outstanding (m): 7,606
- Estimated Return (%): 85%
Shareholders
- Lin Family: 56.0%
- Ping An Asset Management: 9.6%
Share Performance
| Period | Absolute (%) | Relative (%) |
|---|---|---|
| YTD | -9.1 | -0.4 |
| 1m | -10.3 | -6.1 |
| 3m | +33.0 | +20.7 |
| 6m | +36.1 | +23.9 |
| 12m | +1.7 | +1.2 |
Financial Exhibits
- Financial Model Updated: 2018-08-15
- Valuation Basis: 25% discount to end-FY18F ENAV of HKD10.50
- Key Drivers: Strong contracted sales growth and GPM recovery
- Key Risks: Possible surge in land costs
Earnings Forecast Changes
- FY18F Revenue: Increased by 7% to CNY51,697m
- FY18F Cost of Goods Sold: Increased by 10% to CNY37,668m
- FY18F Gross Profit: Slight decrease of 0% to CNY14,028m
- FY18F Selling and Marketing Expenses: No change at CNY984m
- FY18F Administrative Expenses: No change at CNY1,995m
- FY18F Profit Before Taxation: Increased by 4% to CNY15,173m
- FY18F Taxation: Increased by 6% to CNY6,635m
- FY18F Recurring Net Profit: Increased by 1% to CNY6,101m
Valuation and Recommendation
- Target Price: HKD7.90
- Price: HKD4.28
- Market Cap: USD4,234m
- Bloomberg Ticker: 884 HK
- Recommendation: Buy (Maintained)
ENAV and Valuation Metrics
- End-FY18F ENAV: HKD10.50
- Landbank and Properties Under Development: 146% of total ENAV
- Investment Properties: 25% of total ENAV
- Net Debt: -72% of total ENAV
Peers Comparison
| Company | Stock Code | Price (HKD) | Mkt Cap (USDm) | 3-Month Avg T/O (USDm) | RHB/Cons Discount to NAV (%) | P/E (x) | EPS YoY Change (%) | 3-Year EPS CAGR (%) | P/BV (%) | Div Yield (%) |
|---|---|---|---|---|---|---|---|---|---|---|
| Large Peer Avg | - | - | - | - | - | 42.9 | 5.5 | 25.5 | 20.2 | 1.5 |
| China Vanke | 2202 HK | 23.50 | 35,287 | 32.0 | 33.34 / 29.5 | 6.5 | 24.6 | 20.0 | 1.5 | 5.4 |
| Country Garden | 2007 HK | 10.92 | 30,170 | 110.4 | 25.80 / 57.7 | 6.1 | 35.8 | 33.4 | 1.7 | 5.6 |
| Evergrande | 3333 HK | 24.45 | 40,606 | 91.0 | 42.20 / 42.1 | 7.2 | -2.1 | 20.5 | 2.0 | 4.9 |
| China Overseas | 688 HK | 22.75 | 31,752 | 57.3 | 43.00 / 47.1 | 6.2 | 17.4 | 17.5 | 0.8 | 0.7 |
| CR Land | 1109 HK | 26.15 | 23,089 | 41.8 | 42.00 / 37.7 | 7.4 | 28.0 | 20.8 | 1.1 | 1.0 |
| Sunac | 1918 HK | 22.50 | 12,620 | 87.8 | 41.30 / 45.5 | 6.7 | 5.3 | 60.8 | 1.7 | 1.3 |
| Longfor | 960 HK | 19.88 | 15,019 | 15.8 | 35.10 / 43.4 | 8.2 | 27.1 | 25.9 | 1.3 | 1.1 |
Conclusion
CIFI is well-positioned for long-term growth due to its effective land banking strategy, strong risk management, and significant saleable resources. Despite the sector's recent correction, the company is viewed as a re-entry opportunity. Its financials show a clear trajectory of growth with a strong focus on profitability and shareholder returns. The target price of HKD7.90 reflects a 25% discount to its end-FY18F ENAV, offering a compelling valuation.
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