Core idea: Fusumi is a robust investment with low valuations and high dividends, and its business model is closer to commercial real estate. The company holds the core real estate resources in Chengdu, the cash flow has a strong stability and certainty, profit distribution is based on dividends, reinvestment is relatively cautious. At present, the market value of the company is significantly undervalued, so it is recommended to allocate it actively.
Cover for the first time, giving a "buy" rating. Fu Sengmei's profit mainly comes from the rental income of the home store, and its profitability is stable. Considering the arrival of the new project in 2023, we predict that the total income of the company from 2022 to 2024 is 16.8,18.4 and 2.02 billion yuan respectively, and the net profit is 10.0,10.7 and 1.13 billion yuan respectively, and the corresponding PE is 9. 5% respectively.
4, 8.8, 8.3 times. Considering the reasonable equity value of 16.9 billion yuan estimated by DCF, the valuation is significantly on the low side.
Cover for the first time, giving a "buy" rating.
The source of cash flow is stable. Fusumi has more than 690000 square meters of land use right assets in Chengdu, low land acquisition cost in the early years, significant location advantages of major plots, large passenger flow and convenient transportation. The company statement uses the cost method to evaluate the investment real estate, and the current fair value of the real estate has far exceeded the book value. The current home retail format has a certain stability, and even if it does not operate home retail in the future, its core land resources can also obtain stable rental income.
The cash flow is mainly distributed by dividends, and the reinvestment is relatively cautious. Dividends and reinvestment strategies are important factors affecting shareholders' returns. The company has maintained a high proportion of dividends since its listing, with dividends totaling 1.3 billion yuan in the past three years, accounting for 53% of profits. In addition to a small amount of necessary investment to maintain operation, the remaining cash flow is mainly used for (1) business development, (2) investment in financial assets, and (3) reinvestment through subsidiaries or associated companies. By 2021, the book balance of the company's financial assets investment is 52.35 million yuan, and the reinvestment amount used for subsidiaries or associated companies is about 600 million yuan to 700 million yuan, which does not cause significant investment risk, accounts for a low proportion of its historical distributable profits, and the reinvestment is relatively cautious.
The current market value is significantly undervalued, and the higher dividend yield will compensate for the holding term risk. Under a more conservative assumption, we estimate through DCF that the current equity value of the company is 16.9 billion yuan, while the current market capitalization of the company is only 9 billion yuan.
We believe that under the business model of corporate commercial real estate, the cash flow is stable, there is no greater operational risk, the reinvestment risk of the company is also relatively small, and the current market value is significantly undervalued. Such investments are often unable to predict when their value will be discovered by the market due to a lack of catalysts, while Fusumi's current high dividend yield of 7% is a good risk compensation for the duration of the holding period.
Risk hints: (1) capital allocation risk; (2) epidemic recurrence risk; (3) macroeconomic downside risk; (4) information lag risk; (5) calculate hypothetical risk.
