Yuexiu Capital plans to increase the company's shares by no more than 2%, and the majority shareholders are firmly optimistic about the company's intrinsic value. Yuexiu Capital (000987.SZ) announced that its holding subsidiary Guangzhou plans to use no more than 557 million yuan to buy Yuexiu Real Estate shares through the secondary market. The total purchase period is 12 months, and the cumulative purchase does not exceed 2% of Xiu Real Estate's total share capital. Yuexiu Capital's controlling shareholder is also Yuexiu Group; prior to this increase in holdings, Yuexiu Real Estate's controlling shareholder Yuexiu Group held 43.39% of the company's shares. After the increase in holdings, Yuexiu Group's shareholding share will rise to no more than 45.39%. At the same time, Guangzhou Asset has always insisted on focusing on the main business of managing non-performing assets. Through cooperation with leading housing enterprises, it is actively involved in the field of bad real estate relief. This investment in Yuexiu Real Estate shares will also help deepen the level of cooperation and better carry out strategic cooperation in the real estate industry.
The company's sales have declined, but the industry ranking has improved, and investment continues to focus on core Tier 1 and 2 cities. The company announced that from January to April 2024, the company achieved sales volume of 30.1 billion yuan, or -47.5% year on year; sales area of 1.023 million **** meters, or -38.7% year-on-year, and completed 20.4% of the annual sales target of 147 billion yuan. According to Kerry data, the company ranked 10th in the industry in terms of cumulative sales from January to April 2024, an increase of 2 places over the full year of '23. On the investment side, the company acquired a total of 5 plots in January-April, in the three cities of Shanghai, Guangzhou, and Hefei, with a land acquisition amount of 7.42 billion yuan, -48%; the land acquisition area was 356,000 **** meters, -65% compared to the same period, 25% of the land acquisition sales amount and 35% of the land sales area ratio. The company continued to acquire land in the core cities. The company is rich in marketable resources. At the end of '23, the land storage scale was 25.67 million **** meters, and the layout was in 29 cities; first-tier, second-tier, and third-tier land storage accounted for 44%, 51%, and 5% respectively; TOD, urban operation, state-owned enterprise cooperation, and land collateral accounted for 13%, 12%, 16%, and 8%, respectively.
Green state-owned enterprises have new low financing costs and maintained financial stability during active expansion. The company announced that in 2023, the company's interest-bearing debt was 104.4 billion yuan, an increase of 18% over the previous year; the company excluded a balance ratio of 67.4%, a net debt ratio of 57.0%, and a short-term cash debt ratio of 2.0 times; the company completed share financing in '23, raised a net amount of HK$8.3 billion, and issued domestic corporate bonds of 6.9 billion yuan and RMB 3.4 billion in free trade zone bonds; the company's overall average financing cost was 3.82%, down 34 bps year on year.
Investment analysis opinion: The majority shareholders plan to increase their holdings, are firmly optimistic about the company's value, and maintain a “buy” rating. The first two major shareholders of Yuexiu Real Estate have state-owned assets. After the Guangzhou Metro strategic shareholding, the company achieved a new strategic development of “rail transport+property”, and the resource endowment advantage was obvious. Recently, the majority shareholders plan to increase their holdings of the company by no more than 2%, further indicating that the majority shareholders are firmly optimistic about the company's intrinsic value. The company has six integrated and diversified investments, and TOD and land acquisition for urban operations have emerged. We maintain the 2024-26 net profit forecast of 32.0, 35.4, and 3.91 billion yuan. The current price corresponds to 24/25PE at 6.1/5.5X, maintaining a “buy” rating.
Risk warning: Real estate regulation policies were tightened beyond expectations, and the market sales elimination rate fell short of expectations.