Company introduction: the leading enterprise of urban renewal in Dawan area
Kaisa Group Holdings Co., Ltd. was founded in 1999, headquartered in Hong Kong, listed in Hong Kong in 2009, is a large comprehensive investment group in China. At the beginning of its establishment, the company was intensive cultivated in Shenzhen, and then expanded on a national scale, and began to enter the stage of diversified development in 2012.
At present, the company has more than 20 groups and professional companies, covering major economic regions such as Guangdong-Hong Kong-Macau Greater Bay Area, Beijing-Tianjin-Hebei and the Yangtze River Economic Belt, covering more than 20 industrial areas, such as comprehensive development, urban renewal, health care, tourism industry, property management and so on.
The old reform has been accelerated throughout the country, and the top-down policy has been continuously promoted.
At present, the urbanization rate of our country is already at a high level of 60%. Judging from the law of the improvement of urbanization rate in developed countries, the further promotion rate of urbanization rate will slow down. The real estate market will gradually transition from incremental development to stock renewal, and the old city transformation market will gradually open.
The concept of "urban renewal" is put forward for the first time in the 14th five-year Plan. Driven by the policy, the old reform industry is expected to achieve accelerated development. The planning points out that it is necessary to speed up the transformation of the mode of urban development, coordinate the management of urban planning and construction, implement urban renewal actions, and promote the optimization of urban spatial structure and the improvement of urban quality.
The contract sales exceeded 100 billion yuan, and the performance of the Greater Bay area was strong.
Kaisa's contract sales hit an all-time high in 2020. In 2020, the contracted sales area was 6.16 million yuan, an increase of 33% over the same period last year, and a three-year compound growth rate of 27%. Contract sales totaled 106.9 billion yuan, an increase of 21 percent over the same period last year, and a three-year compound growth rate of 24 percent.
Multi-channel acquisition of land to further enhance Kaisa's ability to obtain resources. In 2020, Jiazhao Industry Group won 47 new projects nationwide, with a new project rights and interests area of about 5.65 million square meters, with a value of 190 billion yuan. In terms of the cost of acquiring land rights and interests, the company accounted for 53% of the land acquired through auction and 29% of the old land conversion; according to the area of rights and interests, the new land in the Great Bay area accounted for 63%.
Profit forecast and valuation proposal
From 2021 to 2023, the company is expected to achieve revenue of 71.777 billion, 89.117 billion and 106.4 billion, up 28.70%, 24.16% and 19.39% year-on-year. The net profit attributable to the parent company was 6.359 billion, 7.822 billion and 8.922 billion, up 16.74%, 23.01% and 14.05% over the same period last year. Diluted earnings per share are 0.91,1.12 and 1.27, corresponding to PE 2.75,2.24 and 1.96 times.
We believe that in the long run, with the urbanization rate of first-tier cities exceeding 85%, the rate of urbanization will significantly slow down, and the real estate market will continue to open up from incremental development to stock renewal. In the short and medium term, the scale of the company's real estate equity sales grew rapidly from 2018 to 2020, with a compound growth rate of more than 20%. Under the superimposed old reform model, the relative advantage of the land cost relative to the bidding market is obvious. Under the dual drive, the growth rate of income and profit in the next three years is higher than the industry average. At present, the Hang Seng property construction index trades at 9.0 times earnings, compared with neutral real estate companies of the same market capitalization, Kaisa Group's current share price is only 2.75 times earnings in 2021, which has a clear valuation advantage. In view of the fact that the company belongs to the leading subdivision of the old city transformation industry, its performance growth and profitability are expected to continue to outperform the industry, giving a "buy" rating for the first time.
Risk reminder events: the tightening of the financing environment exceeds expectations, the tightening of real estate regulation and control policies exceeds expectations, and the public information used in the research report may lag behind or not be updated in a timely manner.