Main points of investment:
1. Benefiting from the strong expectation of Shenzhen's national reform, the first target of the integration of real estate resources: real estate is an important part of the industrial layout goal of "one body and two wings" of Shenzhen national reform. At present, the real estate business structure of Shenzhen SASAC is scattered and the single scale is not high. In order to enhance the competitiveness of the industry and create benchmarking housing enterprises, resource integration is imperative. Among the six listing platforms of real estate business, Shen Zhenye A has the most advantage of integration platform in terms of shareholding ratio and structure, assets and business scale, project reserve scale, business concentration, etc. SASAC has increased its controlling stake in a large proportion, Tianjian Group has started mixed reform, Shen Fang A has carried out and China Evergrande Group restructuring process, all of which enhance the company's expectation as an integrated platform for real estate development.
two。 Sales grew rapidly, and performance returned to the growth track: the urban property market warmed up, Jinhui Park2015 entered the market every year, and the company's sales accelerated. The area and amount of equity sales in 2016 were 512,000 yuan and 6.96 billion yuan respectively, an increase of 42% and 51% respectively. Jinhui Park2016 has an initial annual settlement of 25%, contributing 460 million of the investment income, greatly increasing the net profit. Performance guarantee increased to 50.4%, Jinhui Park gradually settled, Guangzhou Iron and Steel Metro project is about to enter the market, the company's performance can continue to grow.
3. High quality soil storage, low cost protection and high gross profit: layout of Shenzhen, Guangzhou, Dongguan, Tianjin, Changsha, Xi'an, Nanning, Huiyang, Shanwei 9 cities. The saleable area of equity is 2.207 million square meters and the value of goods is 41.05 billion, which guarantees the performance of 5.9 years and 6.1 years respectively. Strictly control the cost of land acquisition, the current comprehensive floor price of land storage is only 2511.8 yuan, corresponding to the comprehensive house price of 16042.0 yuan, the ratio of land to housing price is only 15.7%, and the estimated comprehensive gross profit is as high as 49.3%.
4. Looking forward to the layout, the regional dividend is significant: continuous ploughing in Huizhou, Huiyang can settle accounts for 737,000 square meters, and the comprehensive cost is only 331 yuan. Huiyang, adjacent to Shenzhen, is the core beneficiary city of Guangdong-Hong Kong-Macau Greater Bay Area. In 2016, house prices exceeded 10,000 and land value-added dividends were significant. The first one stationed in Shenzhen is a real estate enterprise in Shenzhen-Shantou Cooperation Zone. In March 2016, it won 217000 square meters of land storage with a floor price of 393 yuan. The project has started and enjoys the dividend of the construction of Shenzhen Deputy Center.
5. Profitability and solvency have improved significantly: net sales interest rates rebounded sharply to 23.9 per cent in 2016, driving ROE to an all-time high of 16.6 per cent. Step by step settlement of high-quality projects, investment return and high ROE sustainable period. Financing costs and interest-bearing liabilities are steadily falling, and the three-fee ratio is expected to continue to decline. The repayment of loans increased, and the debt-paying ability improved significantly in 2016: excluding the advance payment, the asset-liability ratio and the net debt ratio fell to 48.2% and 27.2% respectively, which is at a low level in the industry.
Earnings forecast and valuation: the performance is expected to grow continuously, and the EPS for 2017-2019 is expected to be 0.82,1.00 and 1.34 respectively, and the corresponding share price PE is 11x, 9x and 7X respectively. With reference to the comparable company's valuation level and the company's business situation, the company is given 15 times PE for 17 years, corresponding to a share price of 12.3 yuan. The company benefits from the Greater Bay area and Shenzhen Deputy Center at the same time, the company has a RNAV8.73 per share, and the land value-added dividend is significant, establishing the margin of safety. Maintain the company's "highly recommended" rating.
Risk Tips:
The company layout the urban property market fell more than expected; the real estate policy tightened more than expected; the company's performance fell short of expectations; the national reform in Shenzhen fell short of expectations.