We recently invited the management of the company to attend the Sino-Thai International Real Estate Industry Strategy meeting.
High quality of soil storage and financial stability
By the end of 19th, the total salable value of the company was about 45.8 billion, 95% was located in the core first-and second-tier cities, and the top five cities were Tianjin / Nanjing / Wuhan / Changshu / Hangzhou, accounting for 19.0% of the total saleable value, 17.7% of the total saleable value, 17.0% of the shock, 13.1% of the shock, 10.0%. In 2020, the company's salable value was 35.5 billion, of which new goods accounted for 70%; total contract sales in the first half of the year were 7.35 billion, down 27.5% from the same period last year, mainly due to the delay in obtaining pre-sale certificates affected by the epidemic. It is expected that the pace of pushing and sales will resume as the epidemic is under control. Consider 1) the company's goods value is mainly located in the core cities with short supply. 2) with 20 years of overall liquidity easing, we expect the company to achieve an removal rate of more than 70% (19 years: about 72%), and 20-year sales are expected to reach 25 billion, roughly the same as in 19 years. For 20 years, the company will continue to maintain the pace of land acquisition, and investment is expected to account for 30-40% of sales. At the end of the year, the net debt ratio was 57.7%, the cash-to-short debt ratio was 1.5x, and the company's contract sales payback rate in the past five years was more than 90%. We believe that the company as a whole is financially sound.
Real estate operation and property management business develop actively
Over the past 15 years, through the acquisition of stock property layout office and apartment operation in first-tier cities, the company's current income, operation and brand are quite bright: 1) at the end of 19, the asset management scale of the company's real estate platform was about 9 billion yuan. There are 16 projects in the core locations of Shanghai, Beijing, Suzhou and Hangzhou, with a management area of nearly 220000 square meters, including 12 apartment projects, with an average occupancy rate of 93%, and 4 office projects. Average occupancy rate 95% 2) the rental income in 19 years increased by 78.4% to 240 million over the same period last year, including the share of the joint venture performance, and we expect the office apartment platform to contribute more than 20% to the company's net profit. 3) Beijing Dongzhimen project achieved acquisition-transformation-value-added exit within 2 years: the project was acquired through legal bidding in 18 years, with a cost of about 300 million yuan. After the transformation, Wework was introduced as the core tenant and sold at 476 million in March of 20 years, with short cycle and good return. We are optimistic about the development of its real estate operation, and the overall return is expected to be further improved. The property management plate-Jingrui service-is developing actively, with a layout of 36 cities across the country, covering villas, apartments, commerce, government administrative office buildings and other formats. At the end of the year, the contract management area exceeded 25 million square meters, with an income of 440 million yuan. Potential value revaluation opportunities are noteworthy.
Low valuation and dividend attraction, so investors are advised to pay active attention to it.
As of July 24, the company's stock price corresponds to 2.8x19, PE,0.48x19, PB and, 12.0% 19-year dividend yield. The company's property sales are developing steadily, and the stock property operation momentum is good. We believe that the company's current valuation is low and the dividend return is attractive. We advise investors to pay active attention.
Risk tips: (1) substantial tightening of policy; (2) increased volatility of the RMB exchange rate; and (3) the development of the epidemic exceeded expectations.