Main points of investment
Company profile
The company is a listed real estate company directly controlled by Shenzhen SASAC, with a state-owned equity ratio of 34%. At present, it is mainly distributed in Shenzhen, Huizhou, Dongguan and other 8 cities. by the end of the first half of 17 years, the company held a total of about 2.25 million of the unsettled land storage surface. Shenzhen and Huizhou account for a relatively high share of goods value structure, totaling about 42%.
Real estate business: based in Shenzhen, the layout of the country, endowment dividend release sales, the company achieved sales of 4.62 billion yuan (combined table caliber) in 16 years, an increase of 44.3% over the same period last year, a record high In addition, the Jinhui Park project, which has cooperated with Shenzhen Railway for 13 years, began to contribute income last year (the income was confirmed by Shenzhen Railway at the time of settlement), accounting for 57% of the 16-year net profit. According to our estimate, the remaining sales can be 5.6 billion yuan, and it will bring an investment income of 1.78 billion yuan in the future to support the company's future performance. In terms of land acquisition, the company has been strictly controlling the cost of land, and the floor price has declined for three consecutive years. In the future, the company will strive to break the bottleneck of soil storage resources through old reform, cooperative acquisition, and seeking state-owned resources. In terms of capital, by the first half of 17 years, the company's net debt ratio had fallen to an all-time low of 7 per cent, and the refund rate had been more than 90 per cent for many years, with 3.7 billion yuan in hand.
Take advantage of the east wind of Shenzhen-Shantou cooperation zone to enjoy the regional dividend
The Shenzhen-Shantou Cooperation Special Zone was formally established in 2011 with the approval of the Guangdong Provincial CPC Committee and jointly managed by Shenzhen and Shanwei City. according to the plan, the GDP of the cooperation zone will reach 22.5 billion yuan by 2020, with an average annual economic growth rate of more than 30 percent in 12 to 20 years. The strategic significance of the cooperation zone: for Shenzhen, cooperate with its "eastward strategy" to alleviate the shortage of land resources and expand the development space; for Shanwei and even eastern Guangdong, undertake the industrial transfer of Shenzhen, promote the economic development of Shanwei, and promote regional economic integration. The company was one of the earliest developers to enter the cooperation zone and won the Zhenye Times Garden project in March 16, with a planned construction area of 220000 square meters and a value of nearly 2.7 billion yuan. We believe that the Shenzhen-Shantou Cooperation Zone is entering the fast lane of development, and with the company's first-mover advantage in the local area, the company is expected to enjoy the resource dividend brought by the development of the cooperation zone.
The national reform in Shenzhen is accelerated, and the company is expected to benefit strongly.
In October 16, Shenzhen SASAC submitted a series of system documents for deepening the reform of state-owned enterprises during the period of "1-12", which marked the initial formation of the top-level design of Shenzhen's state-owned reform. We believe that Shenzhen's state reform is expected to accelerate its deepening in 2017. Real estate is an important part of Shenzhen state-owned assets "one body and two wings" industrial system. Shenzhen state-owned assets will build more than 15 benchmark enterprises in 2020. As one of the largest business industries under SASAC, real estate is undoubtedly an indispensable part. With the acceleration of national reform in Shenzhen, the company is expected to fully benefit.
Valuation and profit forecast
According to our estimate, the company's NAV116.3 is 100 million yuan, which is equivalent to RNAV8.61 yuan per share. We expect the company's EPS in 2017 and 2018 to be 0.76,0.95 yuan, corresponding to PE multiples of 11.5x and 9.2x. With reference to the comparable median PE of 13 small market capitalization local state-owned enterprises and central enterprises, we give the company 15 times PE in 17 years, corresponding to the target price of 11.4 yuan, covering the "buy" rating for the first time.
Risk reminder event: the company's sales fell short of expectations, and Shenzhen's national reform fell short of expectations.