Lujing China, as an expert on old reform in Shenzhen, has a lot of urban renewal resources. At present, the company's main projects are obtained by participating in the old projects, and the net interest rate remains at a high level of 20%. By the end of 2018, we estimate that the value of equity is about 55 billion yuan, of which 43 billion yuan is located in the Greater Bay area. The company has sold uncarried-over sales of about 2.5 billion yuan, coupled with the sales contribution of Mangrove Bay No. 1 in the first half of 2019, we estimate that the company's property sales revenue will increase significantly in 2019 compared with the same period last year. The old projects in the hands of the controlling shareholders are expected to be injected into listed companies by the end of the year, which is estimated to bring a value of more than 200 billion yuan and a net profit of 40 billion yuan. We give Greenview a target price of HK $3.2 per share, equivalent to a 30% discount rate of adjusted net asset value, re-cover the company and give it a "buy" rating.
Summary of the report
Deep ploughing the old reform experts in Shenzhen. Lujing China obtained the individual development qualification in 1999 and has 20 years of experience in old reform. At present, the main projects of Greenview are obtained by participating in the old projects, and the net interest rate remains at a high level of 20%. By the end of 2018, the company's saleable land storage value is about 57 billion yuan, and the equity value is about 55 billion yuan. The main projects include: No. 1 Mangrove Bay, Shenzhen Fairview Project, Huazhou International Flower City, Zhuhai East Bridge, and Zhuhai Kaiwei Project. Will be able to support the company's short-term sales growth.
The old reform resources of the controlling shareholder. In addition to the existing sales value of about 57 billion yuan in official land reserves, the controlling shareholders also have a lot of resources for old reform projects. Among them, the more mature projects are Shenzhen Nanshan Project, Zhuhai Xiangzhou Nanxi Project, Dongguan Zhangmu Project and Guangzhou Nansha Project. The four more mature projects cover an area of about 2 million square meters with a total construction area of about 12 million square meters. excluding relocation and supporting facilities, the estimated saleable area (including rentable area for investment properties) is about 400-6 million square meters. we estimate that it will bring more than 200 billion yuan of saleable value and 40 billion yuan of net profit to the company in the future.
Residential + commercial, two-wheel drive. With the deepening of urbanization, the property value of the core area of the core city will continue to rise, and the company will strategically retain the main commercial part for self-investment. On the one hand, enjoy stable rental income and cash flow, on the other hand, enjoy property revaluation and appreciation. By the end of 2018, the operating project exceeded 600,000 square meters, and the rent plus operating income was about 540 million yuan. The area under construction is about 100,000 square meters, which has been transferred one after another to support the growth of rental income.
Re-overwrite and give a "buy" rating. Green King China is one of the major old housing enterprises in Shenzhen, and it has high-quality old renovation resources in the main urban area of Shenzhen. under the background of restricting the growth of the property market, the urban renewal projects that the company has mastered have become rare resources, and the potential for asset appreciation will become greater and greater. By the end of 2018, the company had sold uncarried-over sales of more than 2 billion yuan, coupled with the sales contribution of Mangrove Bay No. 1 in the first half of 2019, we estimate that the company's property sales revenue will increase significantly in 2019 compared with the same period last year. We estimate that the company's net asset value plus the total value of the old reform project of the controlling shareholder is about 38.5 billion yuan, and the target valuation is 30% discount rate, including the number of fully diluted shares, which is equivalent to the target price of HK $3.20 per share. We re-cover the company and give it a "buy" rating.
Risk tips: monetary tightening affects sales; Shenzhen property market regulation is tight; confirmed land storage is relatively low; equity dilution effect.