Agile Group is a comprehensive enterprise with real estate as the core for the development of different fields. in addition to traditional real estate development, there are seven industrial sectors, such as property management, commerce, environmental protection and agent construction. we estimate that the segment income from industries other than traditional real estate development accounts for about 30% of the group's total net profit. As each sector becomes more mature, the group's income structure becomes more robust. The Group currently has a land storage capacity of 5300 million square meters, with an estimated value of about $800 billion. It is mainly concentrated in Hainan, Greater Bay area and hot cities in the Yangtze River Delta, and there are urban renewal projects with a value of nearly 360 billion yuan, which can lock in short-and medium-term profit growth. Based on the classified plus total valuation method, we give Agile a target price of HK $14.4 per share. The group's current price is about 4 times core earnings in 2021, with a dividend yield of about 10%, with a relatively attractive valuation, and is first rated as a "buy" by Agile.
Summary of the report
Agile Group, with real estate as the core, develops comprehensive enterprises in different fields. Founded in 1992 in Zhongshan, Guangdong, the Group initially focused on the development of real estate projects with Hong Kong and Macao buyers as the target customers, and introduced Hong Kong-style property management model and golf club elements. During the golden period of rapid growth of China's real estate industry, the Group has developed the development model of tourism real estate and industrial towns. At the same time, it has also expanded from South China to East China and other major economic circles. At present, the group is divided into eight major industries, and we estimate that segment income from industries other than traditional real estate development accounts for about 25% of the group's total gross profit and about 30% of the total net profit.
More than 700 billion yuan worth of goods, concentrated in hot cities in East and South China. As of December 2020, the total construction area of Agile Land Reserve is about 5300 million square meters, with an estimated value of about 800 billion yuan, and the salable value after deducting the balance of unsold goods is estimated to exceed 700 billion yuan. Mainly concentrated in Hainan, the Great Bay area and hot cities in the Yangtze River Delta, accounting for about 50% of the value of goods.
In addition, the Urban Renewal Group under the group is actively negotiating and following up on more than 150 projects, has signed 18 cooperation agreements, locked in a land reserve of about 11.5 million square meters, and locked in a value of nearly 360 billion yuan. The group's marketable resources in 2021 are about 250 billion yuan, with a target sales of 150 billion yuan, a growth rate of about 8.5%.
The structure of assets and liabilities is becoming more robust. Under the active deleveraging efforts, the adjusted net leverage of the group has dropped to about 61%, which is at a reasonable level, and the financing risk is not high. In terms of debt structure, the total amount of short-term debt is about 38.6 billion yuan, the total amount of cash on hand is about 50.9 billion yuan, the cash short-term debt ratio is 1.3 times, and the short-term liquidity risk is low. After deducting contract liabilities, the asset-liability ratio is about 72.3%, which is slightly higher than the 70% stipulated in the three red lines, but the group dynamically adjusts the push pace by selling fixed production to accelerate project development. We believe that Agile's asset-liability ratio will gradually improve.
Give a "buy" rating for the first time. With the group's brand advantage and experience in the real estate field, it is beneficial for it to develop other extension industries in the long run. The success of the independent development of property management business has established the role of the Group as a holding platform for resource allocation. As the areas of property management, agent construction and environmental protection become more mature, its profit share will further increase, and the overall income structure of the group will become more robust. Under the premise of "housing speculation", it will become a comparative advantage of the group. Based on the classified plus total valuation method, we give Agile a target price of HK $14.4 per share. With a price-to-earnings ratio of about 4 times earnings and a dividend yield of about 10% in 2021, the group has a relatively attractive valuation and is first rated as a "buy" by Agile.
Risk tips: monetary tightening affects sales; domestic regulation and control efforts are upgraded