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绿城管理(09979.HK):增长韧性凸显 高派息率 维持“买入”评级

Greentown Management (09979.HK): Growth Resilience Highlights High Payout Ratio Maintains “Buy” Rating

國泰君安國際 ·  Mar 24, 2024 16:00

We maintained our “buy” rating and lowered our target price to HK$9.40. We expect Greentown Management's earnings per share for 2024-2026 to be RMB 0.615, RMB 0.773, and RMB 0.950, respectively, corresponding to a compound annual growth rate of 24.1% for 2023-2026. We lowered our target price to HK$9.40, which is equivalent to 14.0 times the 2024 price-earnings ratio. We maintain a “buy” rating.

Strong results in 2023, with a 100% dividend payout rate, which was a surprise. In the downturn real estate cycle, the company recorded strong 2023 results, with total revenue up 24.3% year over year and profit up 30.8% year over year. Thanks to strong earnings growth and net cash inflows, management announced a payout ratio of 100% for FY2023 (80% is a final dividend and 20% is a special dividend). We believe that the high payout ratio has brought positive surprises to the market. In addition, management also stated that the dividend payout ratio should stabilize above 80% in the next few years.

The strong expansion of the contract floor area ensures high growth. According to the company's disclosure, Greentown managed the total construction area of the new development project in 2023 reached 35.28 million square meters, an increase of 25.0% over the previous year.

In terms of contract construction costs for new development projects, the total amount reached RMB 10.37 billion in 2023, an increase of 20.5% over the previous year. Considering that the total unconfirmed construction costs of the company will exceed RMB 25 billion by the end of 2023, we see a high degree of certainty about the company's profit growth in the next few years.

The contract construction industry is still developing rapidly. We believe that the contract construction business is a blue ocean market, and this is gradually being verified. According to statistics from Yihan Think Tank, housing construction companies added nearly 170 million square meters of construction area in the 2023s, maintaining a year-on-year increase of 53.0%.

Catalysts: 1) A significant increase in newly contracted construction area from CITIC, AMC, and financial institutions as clients; and 2) increased profit margins due to scale effects.

Downside risks: 1) the market penetration rate falls short of expectations; 2) the relief project delivery area falls short of expectations; and 3) the risk that the client fails to pay.

The translation is provided by third-party software.


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