At the present stage, real estate enterprises with growth potential

At the present stage, great changes have taken place in the factors affecting the growth potential of housing enterprises: unsustainable increase in land reserve prices alone, reduction of unique land acquisition model, more leveraged constraints, and operational professionalism has been generally improved; and Rongan Real Estate has a better ability to seize opportunities, as well as the relative advantage of leverage, it is a real estate enterprise with better growth potential.

Have a good ability to seize opportunities

In the latest round of small cycle (2017 to the present), the industry growth rate has generally slowed down, Rongan Real Estate has achieved relatively rapid growth; in this era of significant differentiation at the micro level, Rongan's growth depends on its better vision for project selection. Moreover, in the process of accelerating the growth of Rong'an, the net debt ratio and the net loan ratio are controlled at a reasonable level, and the relevant debt ratio meets the requirements of the "three red lines", which provides a relative leverage advantage for the company's future development.

The pillar of good project reserve and continuous rapid turnover

The "static Perspective" of Project Reserve: sufficient profit Space

From the "static" dimension of the company's hand reserves, since 2019, the real estate price difference of the company's expanded reserves is 43.89%, and the land acquisition cost has been better controlled; combined with interest costs and Jianan costs, the overall static profit margin can still reach 25.05%; the reserve as a whole has a good profit space, which will be the pillar of the company's continuous high turnover.

The "dynamic perspective" of the project reserve: the supply and demand environment is excellent, and the removal speed can protect the regional layout of Rong'an Real Estate. Focusing on the core cities dominated by Zhejiang, the total salable value of rights and interests is about 50 billion yuan, and the value of unsettled rights and interests is about 80 billion yuan; according to estimates, the inventory level of Rong'an Institute has not increased significantly and is still in the decline channel.

The sales side is expected to continue to make efforts, and equity sales are expected to hit 40 billion in 2021. From the micro level of the company's reserves, projects generally have better education and transportation facilities, combined with its product strength, can guarantee better elimination in the competition; the value of promotable project equity is expected to be 40 billion yuan in 2020, and equity sales in 2020 are expected to be 30 billion yuan; and corporate equity sales are expected to be 40 billion yuan in 2021, a year-on-year growth rate of + 33.3%.

Investment suggestion

It is estimated that the company's EPS in 2020-2022 will be 0.72,0.88,1.08 yuan respectively, corresponding to PE 3.7,3.0,2.5 times, and corresponding PB 1.0,0.8,0.6 times, while comparable real estate stocks (taking Zhongnan, Sunshine City and Metro as an example) will have a market earnings ratio of 3.2-5.3 times in 2021, and the company will grow relatively fast in the future, with the first coverage and a "recommended" rating.

Risk hint

1, the real estate policy tightened more than expected; 2, the company's sales fell short of expectations.