The company is a property developer focusing on the Yangtze River Delta region and is transforming into an asset management service provider. As of June 30, 2019, Jingrui Holdings has set up operations in 18 cities in China, covering the Yangtze River Delta, the middle reaches of the Yangtze River, Beijing-Tianjin-Hebei, Cheng-Chongqing and other urban agglomerations.
Sales growth is slowing down. Land storage is concentrated in Tier 1 and 2 cities in the Yangtze River Delta. The quality of land storage is high and there is a reasonable profit margin.
The year-on-year growth rate of the company's sales amount and sales area slowed in the first 11 months of 2019. Under the regulatory policy, the company's sales were under some pressure. The average sales price reached 20,798 yuan/square meter, which basically remained at the level of 2018. Currently, land reserves are based on first-tier and second-tier cities. The opportunity is to focus on the top three and fourth tier. The level of land price to housing price ratio is manageable, and future profit margins are reasonable.
The restructuring of the company led to a decline in revenue and an improvement in profit levels and financial risk. Contract debt has declined year on year, and support for future revenue growth is limited. The company still needs to increase sales scale and sales carry-over reserves and speed in future development. The share of minority shareholders' equity continues to rise, which has a certain uncertain impact on project management and control. Three fees account for a relatively high level of revenue, and management and sales expenses are reasonable. As the equity multiplier declined, the inventory turnover rate was affected by policies to lay out Tier 1 and 2 core cities, and the turnover rate declined.
The company's debt structure is reasonable. When there is no sharp decline in the company's sales, there is little pressure to repay the debt. According to the company's debt repayment scale within one year and the second year of 2018 to calculate its corresponding sales scale, it needs to sell 20.88 billion yuan and 20.75 billion yuan in 2019 and 2020 to repay the debt. As of June 30, 2019, the company needed to repay loans of 10.38 billion dollars within a year, and the amount of unrestricted cash on hand was 11.11 billion. According to the company's current operating conditions and sales situation, there is little pressure to repay debts on a rolling basis through sales. The level of mortgage funding has declined slightly, and the share of inventory and investment property mortgages has increased. The proportion of surviving bonds abroad is higher, and the risk premium for bonds is higher.
NAV estimates 5.24 yuan/share, which is more than 50% off the stock price. Compared to the share price, PE is relatively stable. If the company speeds up the project carry-over speed, it is hoped that the market will increase the market's valuation of the company's PE. The average PE (TTM) value of the company in the past 2 months was 2.97. Compared with the average PE value of the Wind Real Estate II sector, which was -43% and the trend was relatively stable, the company's 2019-2021 EPS forecast was 0.89/0.95/1.05 yuan/share, respectively. If the carry-over rate is increased, PE may recover 4-5 times.
The company has increased light-capital operations, increased fund-raising projects, and it will take time to verify the benefits. At the same time, holdings of commercial properties will be increased, and the company's asset structure will be further adjusted. Youyi Asset Management focuses on private equity investment funds. Hefu Capital's main business includes special investments, direct investments, and joint investments. In the first half of 2019, Youyi Asset Management's existing fund management scale was about RMB 3.07 billion, and Hefu Capital's total investment amount was close to RMB 1.06 billion.
The company's land reserves are of high quality, the asset structure is actively adjusted, the finances are relatively stable, and the pressure to repay debts is low. It is recommended to pay attention
Risk warning: policy risk, financing risk, credit risk, risk of incomplete sales performance