Introduction to this report:
The company's four-wheel drive industry ecology is in a positive cycle, and the Qianhai and South China Logistics Park projects will gradually show profit potential. Results are expected to continue to grow at a high rate in 2023, and the high dividend policy will continue to provide attractive high dividends.
Key points of investment:
Maintain an increase in holdings rating. The company has built a four-wheel drive industrial ecosystem based on modern logistics, toll roads, ports, and environmental protection. The positive cycle of the company's industrial ecology will gradually show profit potential, and the Qianhai project and the South China Logistics Park project will release profits year by year. Maintain the 2024-25 net profit forecast of HK$31.33 billion, and add the 2026 net profit forecast of HK$3.8 billion. Assuming that the dividend rate remains at 50%, it is estimated that the dividend rate will rise to 9.5% in 2024. Maintain the target price of HK$9.08.
The Qianhai residential project was completed and delivered at the end of 2023, helping to increase performance in 2023. The company's revenue increased 35% in 2023; net profit to mother was HK$1.9 billion, an increase of 52%. 1) Logistics Park: The company is based in Shenzhen and has a nationwide layout of high-quality logistics projects. Currently, it manages and operates 37 logistics projects. The comprehensive occupancy rate of mature parks is about 90%, which is superior to the industry level. 2) Expressway: In 2023, traffic on the Shenzhen Expressway increased by 20% due to the release of suppressive passenger traffic demand after the epidemic, achieving a net profit of 2.3 billion yuan to the mother, an increase of 15%. The net profit of 2024Q1 Shenzhen Express was RMB 470 million, up 6.4% year on year. 3) The Qianhai residential project independently developed and operated by the company was completed and delivered in December 2023, with confirmed revenue of approximately HK$5.5 billion.
Revenue from the South China Logistics Park will be released year by year, which is expected to drive performance beyond expectations. The South China Logistics Park is located in Longhua, Shenzhen, covering an area of about 580,000 square meters. It will be transformed into a super headquarters base for the digital economy in South China. It is a major project to explore “investment, construction, management and transfer” after the Qianhai project. The project is being built in two phases. The first phase is a comprehensive industrial park focusing on bonded logistics and commerce. The South China Logistics Park has entered the government's blueprint and signed a “Land Preparation Supervision Agreement” to implement the project by arranging land retention and monetary compensation. Referring to the operation of the Qianhai project, it is expected that the revenue from the South China Logistics Park project will be released year by year, which is expected to drive the company's performance to exceed expectations in the next few years.
The company's high dividend policy continues, and future high performance will increase dividend attractiveness. The company has maintained a high dividend rate for a long time. Since 2006, it has also implemented 17 cash dividends. The cumulative cash dividend exceeds HK$17.5 billion, and the average dividend rate exceeds 45%. The six-year average dividend rate for 2017-22 was more than 50%. The company plans to pay a dividend of HK$0.4 per share in 2023, with a dividend rate of 50%. Assuming that the dividend rate is maintained at 50% in the future, it is estimated that the dividend rate will reach 9.5% in 2024, which is attractive.
Risk warning: economic fluctuations, industry policies, reinvestment risks, market style changes, etc.