Market Report Summary (10 December 2014)
Core Content Overview
This market report provides an analysis of key companies and market indicators across different sectors, focusing on the real estate, internet, and TMT (Technology, Media, Telecommunications) industries. It includes evaluations of company performance, strategic moves, and financial metrics, alongside market index performance and other economic indicators.
Strategic Vision
- Market Position: China Vanke is the world's largest mass residential property developer.
- Core Competence: Strong strategic vision, excellent execution, and comprehensive risk control.
- Growth Drivers: Diversified landbank, major shareholder support, and extensive partner collaborations.
Financial Performance
- Sales and Revenue Growth: Contracted sales and revenue grew at a CAGR of 38.4% / 37.5% from 2004 to 2013.
- Profitability: Core net profit is expected to grow at a CAGR of 20.4% from 2013 to 2016E.
- Valuation: Target price of HK$18.51 is set, representing 7.3x 2015E PE and 1.4x 2015E P/BV.
- Current Price: Trading at 9.3x/7.1 14/15E PE, in line with its peers.
Key Metrics
| Year |
Turnover (Rmb mn) |
Core Net Profit (Rmb mn) |
Core EPS (Rmb) |
PER |
PBR |
ROE (%) |
Net Gearing (%) |
| 2012A |
96,860 |
12,504 |
1.14 |
12.47 |
2.24 |
21 |
23 |
| 2013A |
127,454 |
15,180 |
1.38 |
10.29 |
2.03 |
22 |
31 |
| 2014F |
149,097 |
16,791 |
1.52 |
9.30 |
1.67 |
20 |
29 |
| 2015F |
184,619 |
21,928 |
1.99 |
7.12 |
1.41 |
21 |
13 |
Risks
- Economic Downturn: Weak economy negatively impacts all residential developers.
- Diversification Concerns: May affect profitability and asset turnover.
- Land Market Pressures: High land prices and declining asset turnover could reduce ROE.
Rating
- Rating: HOLD
- Target Price: HK$18.51
- Upside: +4% from current price
Business Developments
- Game Broadcasting: Launched a new brand called HUYA, aiming to spin off as an independent unit.
- Online Education: Acquired 100% stake in an IELTS training school and established 100.com.
- Market Performance: Share price down 16% in the past month due to concerns about growth in music and education.
Financial Highlights
| Metric |
2011 |
2012 |
2013 |
2014E |
2015E |
| Total Net Revenues (Rmb mn) |
320 |
820 |
1,822 |
3,634 |
5,381 |
| Gross Profits (Rmb mn) |
137 |
404 |
941 |
1,829 |
2,619 |
| Gross Margin (%) |
43% |
49% |
52% |
50.3% |
48.7% |
| Operating Income (Rmb mn) |
(99) |
103 |
476 |
1,094 |
1,567 |
| Net Income (Rmb mn) |
(83) |
89 |
477 |
972 |
1,384 |
| Net Margin (%) |
-26% |
11% |
26% |
24% |
24% |
Shareholding Structure
| Holder |
Percentage |
| Steamboat Ventures |
10.27% |
| Morningside China Fund |
5.70% |
| Greenwood Asset |
4.95% |
| Li Xueling |
4.26% |
Price Performance
| Period |
1m |
3m |
6m |
| YY.US |
-19.2% |
-30.9% |
-4.4% |
| NASDAQ |
+2.9% |
+4.7% |
+9.9% |
TMT Sector Highlights
Key Developments
- ChineseAll Files for IPO: First digital publisher to go public in China.
- Baidu Invests in Pixellot: $3 million investment in Israeli video tech startup.
- Didi Dache Secures $700M Funding: Second most well-funded taxi app globally.
- iQiyi Sues LeTV: Alleging unfair competition over ad blocking and content accessibility.
- Xiaomi Introduces Smart Air Purifier: Expanding into home devices with smart features.
Market Performance
| Index |
Price (9 Dec) |
% Change (1m) |
% Change (3m) |
% Change (6m) |
| HSI |
23,486 |
-2.3% |
-4.5% |
+4.8% |
| H-share Index |
11,333 |
-4.6% |
-4.5% |
+4.8% |
| Sh Composite Index |
10,116.5 |
-4.15% |
-4.15% |
+4.8% |
| Sz Composite Index |
1,403 |
-4.3% |
-4.3% |
+4.8% |
Other Market Indicators
| Indicator |
Price (9 Dec) |
Abs Chg |
Chg% |
| WTI Oil ($/bl) |
63.8 |
+0.8 |
+1.2% |
| Gold ($/troy oz) |
1,229.0 |
+35.7 |
+3.0% |
| UST 3m Yield (%) |
0.03 |
+0.02 |
- |
| UST 10y Yield (%) |
2.21 |
-0.044 |
- |
| HIBOR 3m (%) |
0.39 |
+0.003 |
- |
| USD LIBOR 3m (%) |
0.24 |
+0.000 |
- |
| CRB Fut. |
251.1 |
+2.9 |
+1.2% |
| Baltic Dry Index |
933.0 |
-19.0 |
-2.0% |
Summary of Key Points
Real Estate Sector
- China Vanke is the largest residential developer with strong strategic vision and execution.
- Diversified landbank and risk control contribute to balanced sales and sustainable growth.
- Despite challenges, its share price reflects fundamentals and is currently in line with peers.
Internet Sector
- YY.com faces market pressure but is investing in online education and improving game broadcasting.
- Its game broadcasting business has shown strong growth, with a new brand HUYA launched.
- Share price has declined due to market pullback and competition.
TMT Sector
- Highlights include IPOs, new investments, and product launches in the tech and media space.
- Didi Dache secures significant funding, becoming the second most well-funded taxi app.
- iQiyi faces legal action from LeTV over competition practices.
- Xiaomi expands into smart home devices with the introduction of a smart air purifier.
Market Indices
- HK and China equities show mixed performance with declines in some indices and increases in others.
- Asian and US/European indices also show varied performance, with some experiencing small gains and others losses.
This report highlights the strategic moves and financial performance of key players in the real estate and TMT sectors, along with broader market trends and indicators.
