Peace viewpoint:
Backed by Xiamen State-owned assets Construction and Development Group, the "new Fujian system" housing enterprises are rising. The development of Jianfa International starts from the real estate business of Xiamen Jianfa Group (the main body is Jianfa real estate) and relies on the rapid expansion of the group's resources; the board of directors all hold positions in the Jianfa real estate of the holding parent company, which is conducive to mobilizing platform resources. at the same time, superimposed "one-year employment system" market-oriented management mechanism and equity incentives to ensure the company's operating efficiency and development motivation. In 2022, the company's total revenue and return net profit were 99.6 billion yuan and 4.9 billion yuan, respectively, and the CAGR from 2018 to 2022 were 68% and 37%, respectively.
Sales investment is active, adversity break through attack and defense at the same time. In 2022, the company exceeded its sales target during the industry adjustment period, ranking among the top 10 in the industry, and 2023H1 sales continued to lead the growth rate (+ 55.7%) compared with the same period last year; and the scale increase is not at the expense of the equity ratio, which has been maintained at more than 70% in recent years; the product system is more focused on improved products, so project de-engineering and sales management fee management and control have more advantages than the same industry. In terms of investment, the company pays close attention to replenishing positions at the bottom of the land market boom. 2023H1's land sales amount ratio and area ratio are 36.1% and 70.2% respectively, which are higher than the overall value of the top 50 real estate enterprises (21.6% and 27%). At the same time, pay attention to asset liquidity, focus on the core areas to supplement high-quality land, core projects usually have a high single-plate flow rate, effectively avoid the accumulation of heavy inventory to occupy the company's resources, etc., also help to seize the opportunity after the market recovers.
Repeatedly received capital injection from major shareholders, orderly expansion of the balance sheet and improvement of the industrial chain. The company maintains a high degree of financial security, the three red lines "green files" meet the standard, and there is plenty of liquidity on hand. In the total asset structure, inventory and monetary funds account for 78%, ranking first in the mainstream real estate enterprises; the financing cost at the end of 2022 is 4.3%. Approved unmentioned bank borrowing lines are sufficient. In addition, the company uses diversified financing instruments, such as rights issue, convertible bonds, perpetual bonds and so on, to further supplement equity funds. In terms of land storage and finance, it has been repeatedly supported by the parent company to build and develop real estate, and has injected high-quality soil storage projects such as Shanghai and Wuxi for the company many times, and the financial aspect has also provided permanent debt "blood transfusion" to help the downgrade of the "three red lines". In November 2021, the company became the owner of the engineering and technical service company Hecheng shares (603909. SH), to provide design, supervision, construction and other technical services for some of the company's housing development projects, control construction quality, improve project layout and other operational efficiency; in 2022, build property (2156.HK) again, improve the layout of engineering and service industry chain, and release the multiplier effect of coordinated development.
Profit forecast and investment rating: the company relies on Xiamen state-owned enterprise Jianfa Group, major shareholder support and market-oriented operation mechanism to break through adversity, relying on fine product positioning and focusing on regional layout sales performance is better than the same industry, diversified financing tools to actively take land to expand reserves, is expected to further expand market share in the industry reshuffle. It is estimated that the return net profit of the company from 2023 to 2025 is 5.57 billion, 6.5 billion and 7.7 billion respectively, and the corresponding EPS is 3.02,3.52,4.17 yuan respectively. The current stock price (as of August 11, 2023) corresponds to 6.4,5.5,4.6 times of PE, respectively, giving a "recommended" rating for the first time.
Risk hint: 1) there is a downward risk in the company's gross profit margin: if the sales boom continues to decline and the "price for volume" of housing enterprises increases, it will still restrict the gross profit margin at the settlement end; 2) the strength of land acquisition is not as strong as expected risk: if the subsequent land auction rules are adjusted or the land market fluctuates, the company's expansion of land reserves may be blocked, and it will also restrict the growth of sales scale in the future. 3) the policy improvement is not as expected: affected by the credit events of the real estate enterprises, the sales expectations of the cooperative development projects are affected by the credit qualifications of the partners, and the subsequent credit risk events of the partners will also hinder the sales of the company.