Key points of investment:
Company profile. The company was exclusively initiated by Beijing Urban Construction Group. It is the company's largest shareholder, and the Beijing Municipal State-owned Assets Administration Commission is the actual controller. In recent years, the company has established a new situation of collaborative development of the three main businesses: real estate development, foreign equity investment, and commercial real estate management.
The real estate layout is moving from local to national, and product strength is outstanding. The company adheres to the land acquisition strategy based in Beijing, expanding surrounding areas and Tier 1 and 2 cities and central cities. The development area covers Beijing, Tianjin, Chongqing, Chengdu, Nanjing, Qingdao, Sanya, Huangshan, Baoding, etc. The main real estate industry continues to improve quality and efficiency, development efficiency continues to improve, product quality has won market recognition, and brand awareness continues to increase.
The controlling shareholders' asset injection expectations are high, and it is worth looking forward to expanding the main business. The company is the only listing platform for the integration of real estate business and assets under the Urban Construction Group. The Group's projects are expected to continue to be injected into listed companies, which will facilitate the further improvement of the company's high-quality reserve projects. On the other hand, with major shareholders, the company also has an advantage in terms of financing and access to resources.
Sales continue to rise, and performance recovery is worth looking forward to. The company's sales volume has continued to rise in recent years, with sales exceeding the 30 billion level in 2022. Real estate sales are expected to rise further in 2023, and the gradual release of performance can be expected in the future.
The share capital is repurchased and cancelled according to regulations, and the gold content of each share is increased. The company paid more than 1 billion yuan to buy back shares, and the scale is among the highest in the market. Repurposing and canceling the share capital has an obvious effect on increasing the intrinsic value of each share of the company's shares and boosting investor confidence, and will promote the return of the company's stock price to a reasonable level.
Summary and investment suggestions: Overall, the company continues to be deeply involved in Beijing, and has ranked high in sales and land acquisition in Beijing in recent years. As the market environment weakens, competitors are more cautious in acquiring land, which helps the company to increase its market share by overtaking cars at corners. The company has developed aggressively in recent years, and its management and efficiency are gradually on par with better enterprises. Major shareholders are expected to resolve competition in the industry and continue to inject high-quality projects into the company. Furthermore, thanks to the resources and influence of major shareholders, the brand effect of state-owned enterprises, and good financial conditions, it continues to receive high-quality projects from Beijing and foreign ports, and it is worth looking forward to speeding up development.
Starting in 2023, the company's performance is expected to continue to recover as settlement projects increase and gross margin steadily recovers. The company's current valuation is cheap. PB has dropped to nearly 0.5 times, and the stock price has clearly fallen over. Recently, the State Council's State-owned Assets Administration Commission also proposed that further research will be carried out to include market value management in the performance assessment of central enterprise heads, etc., and that the demand for preserving and adding value to state-owned assets is high. In recent years, the company paid more than 1 billion yuan to buy back the company's shares in the secondary market. The repurchase scale is among the highest in the market. The repurchase will also cancel the share capital, which will actually increase the intrinsic value of each share and help return the stock price to a reasonable range.
The company's EPS from 2023 to 2025 is estimated to be 0.41 yuan, 0.58 yuan, and 0.66 yuan, respectively, corresponding to the current PE stock price of about 11 times, 8 times, and 7 times, respectively. Enterprises and groups are strengthening resource integration and increasing development momentum. At the same time, they are optimistic about the company's ability to improve quality and efficiency and invest and develop accurately, thus achieving a continuous rise in industry rankings. It is worth looking forward to the recovery of the company's valuation and the return of value to a rational range. It is recommended to pay attention.
Risk warning: The introduction of real estate optimization policies has fallen short of expectations. Property market sales continue to be sluggish, and sales data are not ideal. Repayments for shed renovation projects are slow, putting pressure on cash flow. The decline in gross margin of sales projects led to an increase in revenue without an increase in profit. Equity investments, etc. continue to generate losses when the stock market declines. The acceleration and efficiency of the company's management and operations fell short of expectations.