On the evening of May 31, 2022, the company issued a voluntary announcement of "redemption of convertible bond funds due in 2022".
Redeem convertible bonds with its own funds to allay market concerns about capital repayment: according to the announcement of May 31, the company will deposit HK $5.038 billion of convertible bonds redeemed funds issued on May 25, 2021 and due on June 1, 2022 into a bank account designated by the trustee to redeem the convertible bonds in full. In the context of the current downward cycle of the real estate industry, some of the concerns about the company in the capital market focus on doubting the control or occupation of the company's funds by related parties and the adequacy of the company's response to this large amount of maturing convertible bonds. The announcement, which is used to redeem all convertible bond funds, is a positive response to the market's previous concerns.
The related parties are doing well: 1) the first place in the sales maintenance industry: according to the TOP100 list of Chinese Real Estate Enterprises from January to May 2022 released by Kerry, Country Garden Services Holdings ranked first among Chinese real estate development enterprises from January to May 2022, of which the full caliber amount of 201.19 billion and the equity caliber amount of 150.08 billion ranked first. 2) financing channels are unblocked: according to the announcement on May 24, Country Garden Holdings's first domestic corporate bonds were successfully issued with an actual issuance size of 500 million yuan with a maturity of 3 years and a coupon rate of 4.5%. 3) continuous repurchase of priority bills boosts confidence: according to the announcement on March 13, from December 31, 2021 to March 13, 2022, Country Garden Holdings bought back a total of $45.7 million in priority bills, conveying positive energy to the market against the background of the industry's overall malaise. 4) Financial institutions give recognition: on March 3, the company signed a 15 billion M & A loan financing line with China Merchants Bank, further accelerating the strategic cooperative relationship of M & A financing between the company and China Merchants Bank. From one aspect-- the dimension of financial institutions, the company has been highly recognized.
Investment suggestion: Country Garden Services Holdings is currently the largest property company with the largest management scale and market capitalization in China, taking into account the continuous delivery area, potential opportunities for M & An and strong brand extension strength of Country Garden Holdings Group in the future. it is expected to maintain its leading position in the industry for a long time in the future.
Although the related party of the company is a private housing enterprise, its sales ranked first in the industry in the first five months, and corporate bonds were issued smoothly with excellent qualifications, so they should not be reduced by Country Garden Services Holdings. This time, the convertible bonds were fully redeemed with their own funds, which once again proved to the market the company's isolation system and safety margin. We expect the company's 2022-2024 net profit to be 5.965 billion, 8.05 billion and 10.327 billion, respectively, and the current share price to be 14.5,10.7,8.4 times PE, respectively, maintaining a "buy" rating.
Risk hints: the downside of the real estate industry is higher than expected, the marketization of property fees is lower than expected, the integration of M & A projects is lower than expected, and the risk of impairment of receivables and goodwill.