20160808-招商证券_香港_-新世界发展-00017.HK-Upgrading_investment_property_portfolio_39页_4mb_4mb
报告摘要
New World Development (17 HK) Summary Report
Core Content Overview
New World Development (17 HK) is a diversified property and infrastructure company with a focus on Hong Kong and China. The report highlights the company's strategic initiatives and financial outlook, emphasizing the potential for re-rating due to three key catalysts: the completion of the Tsim Sha Tsui New World Centre, continuous non-core asset disposals, and a consistent dividend payment record.
Main Points
Investment Property Portfolio Upgrade
- New World has made significant progress in upgrading its investment properties.
- The completion of the Tsim Sha Tsui New World Centre in 4Q 2017E is expected to significantly increase recurring rental income, from HK$1.6bn in FY16E to HK$3.9bn in FY19E.
- The company is disposing of non-core assets to enhance asset turnover and improve the balance sheet.
Re-rating Catalysts
- Completion of Tsim Sha Tsui New World Centre: This 3mn sqf project will boost rental income and provide a substantial GAV of HK$55.3bn.
- Non-core asset disposals: These are expected to generate significant gains, contributing to improved financials and reduced NAV discount.
- Consistent dividend payments: New World maintains a dividend yield of around 4.7%, which is attractive in the current market environment.
Financial Outlook
- New World's FY16E core net profit is expected to decline by 10.3% YoY to HK$6.1bn due to lower-margin projects.
- From FY17E onwards, core net profit is projected to grow by 5% and 25% respectively, driven by business growth and property sales.
- The company's target price is set at HK$11.3, which is based on a 45% discount to FY17E NAV, representing a 1SD above its 7-year mean and 12ppts deeper discount than peers.
Valuation
- The company's FY17E NAV is estimated at HK$193.4bn or HK$20.6 per share.
- Trading at a 57% discount to FY17E NAV, compared to peers at 33%, indicates an attractive investment opportunity.
Key Financials
| Metric | 2014 | 2015 | 2016E | 2017E | 2018E |
|---|---|---|---|---|---|
| Revenue (HK$ mn) | 56,501 | 55,245 | 55,880 | 54,482 | 63,044 |
| Core Net Profit (HK$ mn) | 6,507 | 6,770 | 6,070 | 6,379 | 7,975 |
| Net Gearing (%) | 29% | 26% | 39% | 37% | 32% |
| Dividend Yield (%) | 4.6% | 4.6% | 4.7% | 4.7% | 5.4% |
Business Segments
Property Investment in Hong Kong
- Portfolio includes 10 shopping malls, 5 offices, 2 residential apartments, and 6 hotels.
- Completed attributable GFA is 2.5mn sqf, with 3.6mn sqf under construction.
- The Tsim Sha Tsui New World Centre is a flagship project, with estimated GAV of HK$55.3bn.
Property Investment in China
- Over 50 rental properties, mostly in Tier-1 and Tier-2 cities.
- Estimated rental revenue of HK$850-900mn annually and GAV of HK$23.3bn or HK$2.5/share.
Property Development in Hong Kong
- Attributable landbank of about 9.1mn sqf, with 5.5mn sqf for residential and 3.6mn sqf for commercial.
- Contracted sales are expected to reach HK$12.3-20.9bn in FY17/18E.
Property Development in China
- Total attributable landbank of about 10mn sqm, covering over 15 cities.
- Contracted sales are estimated at HK$20-21bn in FY17E/18E.
Hotels and Serviced Apartments
- 18 hotels with over 8,000 rooms.
- Estimated GAV of HK$24.5bn, with a focus on improving profitability through asset disposals.
Infrastructure and Services
- Operated under NWS Holdings (659 HK), contributing about HK$2.6-2.7bn net profit in FY16/17E.
- Includes roads, energy, water, and logistics projects.
Department Stores
- Operated under New World Department Store (825 HK), with 31 New World and 12 Ba Li Chun Tian stores.
- Contributes the least to GAV at HK$1.2bn or HK$0.1/share.
Sector Valuation Comparison
| Company | Price (HK$) | Mkt Cap (US$ mn) | 3-mth avg t/o (US$ mn) | NAV (HK$) | Discount to NAV (%) | FY15 P/E | FY16E P/E | FY15 Yield (%) | FY16E Yield (%) | FY15 P/B | FY16E P/B | Net Gearing FY15 (%) | Net Gearing FY16E (%) |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| SHKP | 111.00 | 41,438 | 72.3 | 172.0 | 35.5 | 15.7 | 13.5 | 3.1 | 3.3 | 0.70 | 0.69 | 10.9 | 12.1 |
| CK Property | 55.10 | 27,322 | 36.7 | 90.0 | 38.8 | 12.4 | 11.9 | 2.5 | 3.4 | 0.81 | 0.77 | 5.1 | 1.3 |
| Henderson Land | 46.00 | 21,575 | 17.6 | 72.0 | 36.1 | 15.2 | 16.0 | 2.9 | 3.1 | 0.67 | 0.63 | 15.7 | 13.5 |
| Wharf Holdings | 52.20 | 20,402 | 29.8 | 75.0 | 30.4 | 14.4 | 12.9 | 3.6 | 3.6 | 0.51 | 0.50 | 14.9 | 16.9 |
| New World (17 HK) | 9.12 | 11,043 | 12.6 | 21.5 | 57.6 | 11.8 | 13.7 | 4.6 | 4.7 | 0.46 | 0.46 | 25.9 | 39.1 |
| Sino Land | 13.66 | 10,859 | 7.7 | 21.5 | 36.5 | 15.6 | 15.9 | 3.7 | 3.7 | 0.70 | 0.66 | - | - |
| Wheelock | 41.50 | 10,873 | 7.4 | 53.0 | 21.7 | 8.0 | 7.6 | 2.8 | 3.0 | 0.42 | 0.40 | 23.2 | 27.6 |
| Hang Lung Prop. | 16.54 | 9,591 | 10.3 | 25.0 | 33.8 | 16.9 | 14.5 | 4.5 | 4.5 | 0.58 | 0.58 | 1.1 | 5.0 |
Investment Summary
- New World is expected to re-rate due to three major drivers: completion of Tsim Sha Tsui New World Centre, continuous non-core asset disposals, and consistent dividend payments.
- The company's dividend yield is projected to be around 4.7% in FY16E, which is attractive for yield-focused investors.
- The company's financials are expected to improve with positive FCF from FY17E onwards and a reduction in net gearing.
Conclusion
New World Development is positioned for a re-rating as it focuses on improving its investment property portfolio, disposing of non-core assets, and maintaining a consistent dividend yield. The company's valuation is currently at a significant discount to NAV, offering potential upside for investors. The Tsim Sha Tsui New World Centre is a key project expected to drive growth in rental income and GAV.
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