With the support of major shareholders, great-leap-forward development will be achieved: China Merchants Land is the only listing platform for China Merchants Real Estate Holdings Co., Ltd. (hereinafter referred to as "China Merchants Real Estate") in Hong Kong. Under the background that China Merchants Group will support the realization of great-leap-forward development, the company will also receive key resource support from the China Merchants real estate industry.
The project area has good growth and cost advantages: China Merchants Land entered four economically developed commercial hub cities of Chongqing, Nanjing, Guangzhou and Foshan through reverse takeover on October 30, and obtained the development resources of 11 projects. A total of 3.864 million square meters of land reserve was obtained, including 186000 square meters of completed unsold / held floor area, 1.114 million square meters of total salable / do holdings under development, and 2.899 million square meters of total salable / do holdings to be developed. After the acquisition, through the auction market, the company obtained three projects in Foshan and Chongqing, with a total land reserve of 530000 square meters, with a total construction area of 1.488 million square meters.
Excellent management team reflects excellent performance through acquisition projects: at present, most of the management of China Merchants Land have the management background of the parent company China Merchants Real Estate. These managers have senior experience in the real estate industry and rich management experience. The projects to be acquired have shown good performance in the past three years. According to our estimates, from 2010 to 2012, the target company's operating income grew by 78.7%, net profit by 79.6%, and assets and net assets by 29.0% and 35.3%.
Valuation and rating: according to our estimates, the NAV of China Merchants Land was valued at RMB 11.2 billion in 2013, which is valued at RMB 8.96 billion after a reasonable discount of 20%. The target price is HK $2.30 with a "buy" rating for the first time. At the same time, the net profits attributable to shareholders from 2013 to 2015 were 587 million yuan, 834 million yuan and 1.06 billion yuan respectively. This target price corresponds to 10.7 times PE in 2014.