20140514-DBS_Group-Conference_takeaways__Expecting_better_2H_29页_585kb

报告摘要

Conference Takeaways: Expecting Better 2H Summary

Core Content

This conference summary outlines the expectations for the Chinese real estate sector in the second half of 2014, with a focus on policy relaxation, credit support, and sales recovery. It highlights the performance of key developers, the market conditions in different tiers of cities, and land acquisition strategies. The overall outlook is cautiously optimistic, with the sector expected to benefit from localized policy adjustments and improved credit conditions, leading to a re-rating of the sector to 7x FY14 PE, implying a 32% upside.

Main Points

Policy and Credit Loosening:
- Local governments and banks are expected to loosen policies, particularly for first-time home buyers.
- Developers anticipate more support from the credit side, which should help improve sales and market conditions.
- The sector is currently trading at 5.3x FY14 PE and 0.7x P/BV, suggesting potential upside.
Market Conditions by Tier:
- Tier 2 cities are experiencing more pricing pressure, especially in high-end projects.
- Tier 3 cities are showing improvement in market conditions, with sales picking up in 2013 and continued recovery.
- Sales in May and June are expected to improve compared to April, due to planned new launches and promotions.
Land Acquisition Trends:
- Developers slowed land acquisition in Q1 2014 due to high land prices and uncertainty.
- Opportunities for land acquisition are expected to emerge towards the end of the year.
- Some developers are focusing on strategic land purchases in key cities and planning for deleveraging in 2015 and beyond.
Sector Valuation and Upside Potential:
- The sector is expected to re-rate to 7x FY14 PE, which implies a 32% upside.
- The recommended companies are China Overseas, Country Garden, Franshion, and Shimao, all with Buy ratings.
- The HSI was at 22,352 during the conference.

Key Developers and Their Insights

China Overseas (688 HK)

Recommendation: Buy
Sales: Expected to improve in May and June, with a total of close to Rmb7bn contracted sales.
Land Acquisition: Plans to acquire more land in KL, with a target of 7x FY14 PE.
Gearing: Net debt ratio is expected to remain similar to end-2013.
Gross Margin: Expected to stay in a 32-35% range.
Dividend Payout: Maintained at 20-30%.

Country Garden (2007 HK)

Recommendation: Buy
Sales: Achieved 32% of sales target in 2014.
Land Strategy: Focuses on smaller land purchases to reduce concentration risk.
Sales Incentives: Offers 3-year management fee waivers for referrals, avoiding price cuts.
Dividend Payout: No immediate plans, but open to consideration for balance sheet management.

Franshion (817 HK)

Recommendation: Buy
Sales: Expected to improve in May and June with more launches and promotions.
Gross Margin: Expected to be in a 32-35% range.
Dividend Payout: Maintained at 20-30%.

Shimao (813 HK)

Recommendation: Buy
Sales: Expected to improve in May and June.
Gross Margin: Expected to stay in a 32-35% range.
Dividend Payout: Maintained at 20-30%.

Evergrande Real Estate (3333 HK)

Recommendation: Buy
Sales: Achieved Rmb41bn in contracted sales.
Land Strategy: Plans to slow down land acquisitions in 2014.
Construction Cost: Rmb3.3k/sm for land, Rmb0.7k/sm for construction, and Rmb0.3k/sm for business tax.
New Projects: Expected to launch 50-60 new projects in 2014.

Greenland Hong Kong (337 HK)

Recommendation: Buy
Sales Target: Rmb12bn in 2014, Rmb20bn in 2015, Rmb50bn in 2018.
Land Bank: AV of Rmb2k/sm, ASP of Rmb10k/sm.
Parent Support: Includes land negotiation, funding, and management team injection.
Debt Reduction: Trust loans will be fully repaid by June 2014, with borrowing costs expected to drop to 6%.

Lai Fung Holdings (1125 HK)

Recommendation: Not Rated
Investment Focus: Maintains focus on Shanghai, Guangzhou, and Zhongshan.
IP Growth: Targets 8m sf of investment property by 2020.
Land Acquisition: Interested in later phases of Hengqin project, but no fixed budget.

Minmetals Land (230 HK)

Recommendation: Not Rated
Asset Injection: Expected to come from share placement and debt.
M&A Opportunities: Sees potential for project-level acquisitions.
Gearing: Likely to exceed 50% by end-2014.

Yuexiu Property (123 HK)

Recommendation: Buy
Sales: Expected to improve in May and June with new launches.
Price Cuts: Considered for some Tier II/III cities.
Performance: Wuhan is performing better than other cities.

Sino-Ocean Land (3377 HK)

Recommendation: Hold
M&A Focus: Seeks project-level M&A opportunities.
Product Strategy: Focuses on seven product lines, three of which are mature.
Sales Targets: Aims for 60% sell-through rate within one month of launch.

Summary of Key Recommendations and Valuation

Company	Code	Price (HK$)	Target Price (HK$)	Rec	Mkt Cap (HK$bn)	FY14F PE	Upside %
China Overseas	688 HK	19.06	29.84	Buy	155.8	6.9	51.3
Country Garden	2007 HK	3.11	6.22	Buy	57.4	4.6	100.0
Franshion	817 HK	2.33	3.83	Buy	21	5.8	64.4
Shimao	813 HK	15.32	25.83	Buy	53.2	5.3	68.8

Summary of Main Views

The real estate sector is expected to benefit from localized policy relaxation and improved credit conditions.
Tier 2 cities are under more pricing pressure, while Tier 3 cities are recovering.
Land acquisition is expected to slow in 2014 but may pick up towards the end of the year.
The sector is expected to re-rate to 7x FY14 PE, implying a 32% upside.
Developers are adopting differentiated strategies, including price cuts, referral incentives, and targeted land purchases.
Deleveraging is expected to begin in 2015, with dividend payouts likely to remain stable or increase depending on cash flow and investment needs.
M&A activity is expected to increase, especially in project-level acquisitions.
Sales recovery is anticipated in May and June due to more new launches and promotions.
Valuation is seen as undervalued, with some companies trading below NAV and showing potential for upside.