Jinhui Holdings is a leading large real estate developer. By the end of July 2020, the company had 160 property development projects in different stages in China, covering 31 cities, focusing on the Yangtze River Delta, the Bohai Rim, South China, Southwest and Northwest. The total construction area of the company's property development project is 29.08 million square meters, of which 93.3% are located in second-tier cities and core third-tier cities. In terms of comprehensive strength, the company ranks 36th in the "Top 50 Chinese Real Estate developers in 2020" awarded by the China Real Estate Association and the China Real Estate Evaluation Center of Shanghai Yiju Real Estate Research Institute, and ranks among the top 10 comprehensive strength of Chinese real estate developers.
Sino-Thai viewpoint
China's real estate competition is fierce, and the company is at the forefront of the industry: overall investment in the real estate industry has maintained a momentum of growth due to the rapid growth of the domestic economy and fixed asset investment, according to the National Bureau of Statistics. It grew at a compound annual growth rate of 6.8 per cent from 9.5 trillion yuan in 2014 to 13.2 trillion yuan in 2019. The total floor area sold increased from 1.05 billion square meters in 2014 to 1.5 billion square meters in 2019, with a compound annual growth rate of 7.4 per cent. China's residential property market is highly fragmented and competitive. According to the 2019 ranking of China's 10 billion enterprises in real estate sales released by the index data, the company ranked 40th in terms of signed sales.
In terms of operating performance: in the fiscal year from 2017 to 2019 and the first four months of 2020, the company's total revenue was 11.78 billion yuan, 15.97 billion yuan, 25.96 billion yuan and 2.93 billion yuan respectively, of which nearly 95% came from property development and sales, mainly residential properties, accounting for about 3% of the income from property management. The gross profit margin was 32.2%, 30.2%, 21.8% and 27.3% respectively, which decreased year by year because the increase in the average land acquisition cost per square meter delivered exceeded the increase in the recognized average selling price per square meter. In addition, the projected gross profit margin for 2020 will be lower than that of April 2020 by 27.3%. This is mainly due to the company's expected delivery of a large property project, Hangzhou Jiushang Yunzhu, the high cost of land acquisition and the price control measures taken by local governments. it produces a relatively low profit margin for the rest of 2020; the cost of sales accounts for 67.8%, 69.8%, 78.2% and 73.4% of the revenue for the same period, respectively. The net interest rates are 17.2%, 12.6%, 9.7% and 6.1% respectively; the company's total borrowing consists of interest-bearing bank loans and other loans, priority notes, corporate bonds and asset-backed securities, which are 34.03 billion yuan, 43.17 billion yuan, 49.07 billion yuan and 52.59 billion yuan respectively.
Valuation: based on 4 billion shares after the global public offering, the company's market capitalization is HK $140-18 billion. In terms of valuation, the company's price-to-earnings ratio in 19 years is about 4.9-6.3 times, and the price-to-book ratio is about 0.66-0.82 times, which is in the industry average. This time the price stabilizer is Agricultural Bank of China International, with a total of three projects in 2020, with a performance of 2 increases and 1 draw on the first day. We review that for more than a year, real estate companies have limited first-day gains and low enthusiasm in the new stock market, so they are given a rating of 68 points as "neutral".
Risk hints: (1) China's macroeconomic impact, (2) future expansion is lower than expected, (3) market competition risk
