20160525-招商证券_香港_-雅居乐集团-03383.HK-Key_takeaways_from_our_site_visits_13页_1mb

Focus Charts Summary

Core Content Overview

This document provides an in-depth analysis of Agile Property's financial performance and key projects in the Huizhou property market, along with broader insights into the market dynamics and valuation comparisons. It includes several figures and tables that highlight key financial metrics and market trends.

Key Projects

Agile Egret Lake Huizhou

• Location: Huiyang District, Huizhou (100%-owned)
• GFA: Total 2mn sqm, Remaining 0.9mn sqm
• Financials:
  • Contracted sales: RMB2.7bn or 4.4% of gross NAV
  • Prevailing ASP: RMB7,500 psm (high-rise), RMB20,000 psm (bungalow), Blended ASP: RMB8,700 psm
  • Land cost: RMB330 psm
  • Contracted sales estimate for 2016E: RMB900mn
• Notes:
  • The project has been under development since 2007
  • 50% of buyers are from Shenzhen
  • Blended ASP increased by 24% from RMB7,000 psm in 2015
  • Most units are pre-sold, with new phases planned for 4Q16E

Agile Garden Huiyang

• Location: Huiyang District, Huizhou (100%-owned)
• GFA: Total 2.6mn sqm, Remaining 2.4mn sqm
• Financials:
  • Contracted sales: RMB1.1bn or 1.8% of gross NAV
  • Prevailing ASP: RMB10,000 psm (1Q16: RMB5,100 psm)
  • Land cost: RMB220 psm
  • Contracted sales estimate for 2016E: RMB1.2bn
• Notes:
  • Launched for pre-sales in July 2015
  • Targeting first-home buyers and Shenzhen investors
  • 70% of buyers are from Shenzhen
  • Project is expected to generate about RMB1bn in contracted sales annually

Agile Garden Heyuan

• Location: Yuanchang District, Heyuan (100%-owned)
• GFA: Total 2.7mn sqm, Remaining 1.2mn sqm
• Financials:
  • Contracted sales: RMB950mn or 1.5% of gross NAV
  • Prevailing ASP: RMB4,900 psm
  • Land cost: RMB270 psm
  • Contracted sales estimate for 2016E: RMB1.3bn
• Notes:
  • Developed since 2006
  • Has mature infrastructure and nearby facilities
  • 50% of total GFA has been completed
  • Market conditions have improved, leading to ASP increase
  • Expected to generate RMB1bn in contracted sales annually
  • Estimated current phase GPM at 30%

Huizhou Property Market Insights

Shenzhen Buyers Influence

• Sales Growth: In 2015, Huizhou property sales grew 89% YoY to RMB43bn, driven by Shenzhen buyers
• Market Comparison: Growth rate slightly behind Shenzhen (123%) but much better than Tier-3 cities (20%)
• Recent Trends: In 4M16, sales volume increased 47% YoY, indicating strong market momentum

Inventory Turnover

• Inventory Period: 5 months at April-end 2016, better than Tier-3 cities (16-18 months)
• Supply Outlook: Future supply is expected to increase as developers have landbanks and accelerate construction

Property Price Trends

• Price Increase: Home price index appreciated over 20% in 1H16 due to strong demand and undersupply
• Short-term Outlook: Price hike is expected to continue as market momentum persists

Land Supply

• Decline: Land sales dropped significantly from 15-25mn sqm (2009-2013) to 8.1mn (2014) and 3.1mn (2015)
• Impact: Expected to help clear inventories and improve profitability in the future

Financial Performance

Revenue and Profit Growth

• Revenue: RMB38,403mn in 2016E, with a 2% increase from FY15
• Gross Profit: RMB10,381mn in 2016E, up 3% from FY15
• Core Net Profit: RMB2,725mn in 2016E, up 12.2% from FY15
• Profitability:
  • Gross margin: 27% in 2016E
  • Core net profit margin: 8% in 2016E
  • ROE: 8% in 2016E
  • ROA: 2% in 2016E

Key Financial Ratios

• Net Gearing: 76.8% in 2016E
• Interest Coverage: 1.8x in 2016E
• Liquidity:
  • Free cash flows: RMB-237mn in 2016E
  • Total debt - total equity ratio: 124% in 2016E
  • Net debt - total equity ratio: 85% in 2016E

Valuation and Investment Outlook

Valuation Metrics

• Discount to NAV: 67.3% for Agile Property in 2016E
• Peers Comparison:
  • Large peer average P/E: 53.0
  • Agile's FY16E P/E: 46.0
  • Agile's FY16E P/B: 0.4
  • Agile's FY16E yield: 4.6%

Contracted Sales Forecast for 2016E

• Total Contracted Sales: RMB40,965mn
• By Projects:
  • Agile Egret Lake Huizhou: RMB896mn (2.2% of total)
  • Agile Garden Huiyang: RMB1,170mn (2.9% of total)
  • Agile Garden Heyuan: RMB1,188mn (2.9% of total)

Investment Ratings

• Industry Rating: OVERWEIGHT (Expect sector to outperform the market over the next 12 months)
• Company Rating:
  • BUY: Expect stock to generate 10%+ return over the next 12 months
  • NEUTRAL: Expect stock to generate +10% to -10% over the next 12 months
  • SELL: Expect stock to generate loss of 10%+ over the next 12 months

Analyst Disclosure

The analysts responsible for this report certify that the views expressed reflect their personal opinions on the subject securities and issues.