Key points of investment
The initial rating coverage gave a buying rating. The target price was HK$4.8, with room for an increase of 102% from the current price. Dat Xanh Hong Kong is Dat Xanh Group's listing platform in Hong Kong. It was listed backdoor in late 2013.
The main business is real estate development and sales and internet finance. We forecast the company's revenue for 2016-2018 to be RMB 124.4, 175.0 and RMB 21.56 billion respectively (same below), and profit attributable to shareholders of RMB 13.9, 20.3 and RMB 2.74 billion respectively, up 531%, 46% and 35% year-on-year respectively.
Based on the company's sales progress and sales price, we calculated that the company's NAV was HK$8.52, giving the company a 12-month target price of HK$4.8, which is equivalent to the NAV discount of 44%, equivalent to 9.4, 6.5, and 4.8 times PE in 2016-2018. There is room for a 102% increase from the current price. The initial rating coverage gave a buying rating.
The real estate development business developed rapidly: After Dat Xanh Group joined, the company's real estate development business developed rapidly. Contract sales increased from 3.5 billion yuan in 2013 to 17.4 billion yuan in 2015, with a compound annual growth rate of 123%. The company's long-term sales target reached 50 billion yuan in 2018, and the compound growth rate for the next 3 years will reach 30%. The company has abundant land reserves, reaching 14 million square meters, which can be used for the company's development in the next 3-5 years.
The performance of the Internet finance business is highly flexible: the company established Xanji Financial Services in 2015 to engage in Internet finance business to address the financial needs of real estate developers, buyers, and owners in the real estate development cycle. The product “Real Estate Treasure” currently launched is very popular, and the mobile app Greenland Guangcai has reached 400,000 registered users. It is estimated that by the end of 2016, the assets managed by the company will reach 7 billion yuan, and the platform's transaction volume will reach 20 billion yuan. The performance is flexible.
Risk warning: The real estate development business is affected by the country's macroeconomic and industry policies; the development of the Internet finance business does not meet expectations and regulatory risks; the RMB exchange rate fluctuates.