According to a research report released by Guojin Securities, the first Yuexiu Real Estate (00123) "buy" rating is expected to return home net profit of 4.1 billion yuan, 4.71 billion yuan and 5.65 billion yuan from 2023 to 2025, a year-on-year growth rate of + 3.7%, + 14.9% and + 19.8%, with a target price of HK $9.8, Zhitong Financial APP learned. The real estate industry is in a period of policy relaxation, the company's land storage quality is high, diversified land replenishment capacity is strong, sales are expected to continue to grow.
The main points of Guojin Securities are as follows:
Backed by Guangzhou state-owned assets, the sales scale has increased steadily.
Yuexiu Group, the major shareholder of ①, holds 43.39% of the shares, while the second shareholder, Guangzhou Metro, holds 19.9%. The two shareholders have coordinated development with the company. ② Company has developed steadily and its sales scale has continued to grow. 1H23 sales of 83.6 billion yuan, year-on-year growth rate of + 71%, sales ranking rose to 13th, year-on-year growth rate of TOP20 real estate enterprises first. The bank believes that the company's subsequent sales growth is still sustained, mainly because: the land storage of ① is sufficient, and the coverage ratio of the land storage value to sales is 5.5 times by the end of 2022; ② is of high quality, and 93% of the land storage of 2023H1 is located in the first and second line; ③ Guangzhou accounts for more than 40% of the company's sales and total land storage. Guangzhou has introduced a series of support policies, and the market is gradually repairing.
Take the land with good rhythm, strong strength, focus on the core city, and diversified channels.
In terms of rhythm, the company has moderately expanded its table during the land acquisition window period since 2H21 (the land profit margin is better than that of 1H21), and the project profit margin is better. In terms of strength, the strength of the company's land acquisition in 2022 is 1.68 and 2023H1 is 0.88, and the amount of land acquired by rights and interests has risen to the sixth in the industry. In the focus, the company 2022 and 2023H1 new land 100% focus on the first and second line, outside the Greater Bay area, continue to increase the size of East China and Beijing and other de-capitalized and more secure cities. In terms of channels, the moat of land acquisition has been built through "611" multi-storage. Since 2020, more than 50% of the new land reserves have come from private competition. In the current environment of fierce bidding for core projects in core cities, differentiated land acquisition methods help companies to fully replenish high-quality land reserves.
The operation is sound and financial security, the financing interest rate is reduced, the financial cost is reduced.
The three red line indicators of 1H23 were further optimized, excluding the pre-asset-liability ratio of 66.8%, the net debt ratio of 53.2%, and the cash-to-debt ratio of 4.2x. The company's good financial structure and state-owned assets background are recognized by the capital market, and the financing channels are smooth. In the first half of the year, the company successfully issued five credit bonds totaling 5.4 billion yuan in China and two offshore RMB bonds in the free trade zone totaling 3.4 billion yuan. Interest rates on new 1H23 bonds are all below 4 per cent, and funding costs have fallen to 3.98 per cent (down 18bp from 2022). In May this year, the company completed the rights issue at a price of HK $9.0 per share, with a net income of about HK $8.3 billion.
Risk Tips:The recovery of Guangzhou market is not as expected; the replenishment of core cities is insufficient; the effectiveness and sustainability of the policy are not as expected.