I. Overview of events
On the evening of August 7, the company issued the "Bond issuance Plan announcement", announcing that the company intends to issue bonds to raise no more than 600 million yuan, with a bond maturity of no more than 7 years, and invest in guaranteed housing construction projects and urban village renovation projects. The pre-issue plan has yet to be examined and approved by the shareholders' meeting.
II. Analysis and judgment
It will effectively alleviate the current situation of short-term capital shortage and reduce the cost of capital.
The company's sales rebate of 511 million yuan in the first half of the year, although a substantial increase of 65.37% over the same period last year, but the company's short-term shortage of funds has not been solved. The 2013 China report shows that the company's monetary funds are only 421 million yuan, while the non-current liabilities due within one year are 632 million yuan, and monetary funds can no longer cover short-term interest-bearing liabilities. The size of the bond issue does not exceed 600 million yuan, and the maturity of the bond is longer, which will effectively ease the shortage of funds.
The coupon rate of the bond will be finally determined through offline inquiry. In terms of recent bond issuance rates, the coupon rates on most corporate bonds are below the benchmark five-year loan rate. The bond issue may reduce the company's cost of capital.
The fund-raising project involves the construction of indemnificatory apartment, which is in line with the guidance of real estate policy, and the total amount required is 912 million yuan.
The funds raised will be used for two projects, one is Shangyu 80,000 square meters indemnificatory housing construction project, and the other is Wuhan "urban village" reconstruction and housing construction project. The two projects are in line with the policy orientation of increasing the supply of indemnificatory apartment. The two projects need to invest 240 million yuan and 672 million yuan respectively, totaling 912 million yuan. In addition to the funds raised, they also need to be made up with their own funds.
This year is rich in available resources, and the annual sales growth is a foregone conclusion.
The increase in the company's available resources this year was the main factor contributing to the increase in sales in the first half of the year. Items available for sale this year include Tianxiang Huating, Wuhan Lijing Bay, Wuhan Moshui Lake, Qingyuan Wuzhou Century City, and so on. Among them, the Wuhan Moshui Lake project will be launched in the third quarter, and the available resources will be richer in the second half of the year. Sales will continue to grow at a high speed throughout the year.
Look forward to the company's new breakthrough in land reserve.
The company has not added new land reserves since 2012, and the shortage of funds is an important reason. According to the China News, as of mid-2013, the company's monetary capital was only more than 400 million yuan, and the construction funds needed for the rich projects available for sale this year were also relatively large. Issuing bonds can relieve short-term financial pressure, sales rebate or increase in the last half of the year, looking forward to a new breakthrough in the land reserve of the company.
Third, profit forecast and investment suggestions
We maintain our previous forecast that the company's EPS from 2013 to 2015 is 0.22,0.35 and 0.69 yuan, respectively. The corresponding PE is 13x and 8x respectively. NAV is valued at 5.12 yuan and is currently trading at 3.16 yuan, a discount of 38%. Give a "highly recommended" rating.
Fourth, risk tips:
The bond financing plan was not approved; the regulatory policy was increased; sales were lower than expected; and the company's access to new projects was blocked.