股
票
研 [Table_Title] Van Liu 刘斐凡 Company Report: Ronshine China (03301 HK)
究 (86755) 2397 6672 EquityResearch 公司报告： 融信中国 (03301 HK) [email protected]
2 August 2018 A[Table_summary] Fast Growing Property Developer, Initiate with "Buy" 一家快速增长的地产开发商，首予“买入”
公 Steady fundamentals for the property sector will remain. In 2018, we Rating:[Table_Rank] Buy 司 conservatively estimate that the YoY growth range of commodity housing Initial sales amount and GFA should be between -5% and 0%, and -10% and -5%, 报 respectively. We also expect stable ASP, decreasing saleable areas and 评级： 买入 (首次覆盖) 告 steady investment. CompanyReport Ronshine China Holdings Limited ("Ronshine China") is a fast growing 6[Table_Price]-18m TP 目标价 : HK$16.55 property developer. Contracted sales is expected to extend fast growth and
reach over RMB120.0 bn in 2018. Abundant land bank in high-tier cities and Share price 股价: HK$9.000 strong M&A capacity will support the Company's scale expansion. Riding on
proper unit land costs, gross margin will rebound to over 22.5% during 告 2018-2020. The shares placement and senior notes issuance hint a steady
Stock performance 证 financing channel. Despite the Company's high leverage ratio, we expect 股价表现
报
limited solvency risks because of strong contracted sales growth and steady 券 [Table_QuotePic]
究 financing channels.
研
研 We estimate the Company’s total revenue in 2018-2020 to be RMB58,741 究 mn, RMB81,154 mn and RMB98,033 mn, respectively. Underlying net profit
券 in 2018-2020 is expected to reach RMB3,476 mn, RMB4,976 mn and 报 RMB6,086 mn, representing a CAGR of 67.0% in 2017-2020.
告 证 EquityResearch Report We set the Company's target price at HK$16.55, which implies a 45%
discount to its 2018F NAV of HK$30.09 per share, 6.2x underlying 2018 PER
and 1.5x 2018 PBR. Initiate with "Buy" rating for Ronshine China. Risk factors: 1) property sales missing expectations and 2) solvency risks. [Tab le_I 房地产行业稳定的基本面将维持。在 2018 年，我们保守预计商品房销售额和销售面积的 nfo1 同比增长区间为-5%- 0%和-10%- -5%。我们也预计稳定的房价，减少的待售面积和稳健 的投资。 ] Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 房 融信中国控股有限公司（“融信中国”）是一家快速增长的地产开发商。合约销售将延续 股价变动 1 个月 3 个月 1 年 地 快速增长并预计在 年达到人民币 亿元以上。在高线城市充足的土储以及强健 Abs. % 2018 1,200 绝对变动 % (11.4) (26.0) 5.9 产 的并购能力将支持公司的规模扩张。基于合适的单位土地成本，毛利率将在 2018-2020 年 Rel. % to HS Index 相对恒指变动 % (7.1) (16.2) 5.5 行 反弹至 22.5%以上。股票配售和优先票据的发行显示了稳定的融资渠道。尽管公司的净资 Avg. Share price(HK$) 业 产负债率高，由于强劲的合约销售增长和稳定的融资渠道，我们预计有限的偿付风险。 平均股价（港元） 9.6 10.7 10.2
Property Sector Source: Bloomberg, Guotai Junan International. 我们估计 2018-2020 年的收入分别为人民币 587.41 亿元，人民币 811.54 亿元和人民币 980.33 亿元。2018-2020 年核心净利为人民币 34.76 亿元，人民币 49.76 亿元和人民币 60.86 亿元，相当于 2017-2020 年有 67.0%的年复合增长率。
我们给予公司目标价 16.55 港元，较 2018 年每股净资产估值 30.09 港元有 45%的折让， 相当于 6.2 倍 2018 年核心市盈率以及 1.5 倍 2018 年市净率。首予融信中国“买入”评级。 风险因素：1）低于预期的物业销售；2）偿付风险。 [Tab Y[Table_ear End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE le_I 年结Profit] 收入 股东净利 每股净利 每股净利变动 市盈率 每股净资产 市净率 每股股息 股息率 净资产收益率
12/31 (RMB m) (RMB m) (RMB) (△ %) (x) (RMB) (x) (RMB) (%) (%) nfo2 2016A 11,372 1,292 0.964 (31.9) 8.4 5.571 1.4 0.000 0.0 22.0 ] 2017A 30,341 1,680 1.223 26.9 6.0 7.442 1.0 0.000 0.0 19.0 融 2018F 58,741 3,778 2.363 93.2 3.3 8.845 0.9 0.473 6.1 31.0 2019F 81,154 5,312 3.324 40.7 2.3 11.504 0.7 0.665 8.6 32.7 信 2020F 98,033 6,478 4.053 21.9 1.9 14.746 0.5 0.811 10.5 30.9 中 总股数 大股东 国 [Table_BaseData]Shares in issue (m) (m) 1,598.3 Major shareholder Ou Zonghong 63.4%
Market cap. (HK$ m) 市值 (HK$ m) 14,384.7 Free float (%) 自由流通比率 (%) 36.6 3 month average vol. 3 个月平均成交股数 (‘000) 6,038.1 FY18 Net gearing (%) FY18 净负债/股东资金 (%) 127.3 52 Weeks high/low (HK$) 52 周高/低 (HK$) 14.640 / 8.000 FY18 Est. NAV (HK$) FY18 每股估值（港元） 30.1
RonshineHK) (03301 China Source: the Company, Guotai Junan International.
See the last page for disclaimer Page 1 of 20
[Table_PageHeader]Ronshine China (03301 HK)
] 1 r a M t h g i R _ e l b a T [
Contents
INDUSTRY ...... 3
Policy and Monetary Environment ...... 3 Sector Fundamentals ...... 5 August2 2018 Sector Characteristics ...... 8
COMPANY OVERVIEW ...... 9
Company Profile ...... 9 Contracted Sales ...... 9 Land Bank ...... 10 Financing Capacity ...... 11
FINANCIAL ANALYSIS ...... 12
] 2 r a M t h g i R _ e l b a T [
Revenue Analysis ...... 12 Gross Profit Analysis ...... 13 Operating Expenses Analysis ...... 13 Operating Profit Analysis ...... 14 Finance Costs ...... 14
Income Tax ...... 14
Net Profit Analysis ...... 15
ROA and ROE ...... 15 (03301 HK) Net Gearing ...... 16
Cash Flow Analysis ...... 16 融信中国 VALUATION ...... 17
Ronshine China
Report
Company
See the last page for disclaimer Page 2 of 20 [Table_PageHeader]Ronshine China (03301 HK)
INDUSTRY
] 1 r a M t h g i R _ e l b a T [
Policy and Monetary Environment
The tightening and targeted policy environment will be maintained but policy should be moderately loose if the macro economy starts to deteriorate due to the Sino-US trade war. In Jun. 2018, shantytown redevelopment project approvals have been tightened by China Development Bank. Looking forward, ASP has become stable, stock levels stayed at a proper level and the land auction premium rate cooled down. Thus, there should be no trigger for policy changes. However, we think targeted August2 2018 policies should be maintained to promote the steady and sound development of the property sector. Alongside the hot market in some lower-tier cities, we expect tightening policies to extend to lower-tier cities but policies in higher-tier cities will be maintained.
Table 1: Cities Experiencing Tightening Policies Region Province City Shanghai Shanghai Yangtze River Delta Jiangsu Yangzhou, Suzhou, Wuxi, Nanjing, Zhenjiang, Changzhou, Xuzhou and Nantong Zhejiang Hangzhou, Jiaxing, and Ningbo
Guangdong Guangzhou, Shenzhen, Foshan, Dongguan, Zhuhai,] Huizhou2 r a andM t Jiangmenh g i R _ e l b a T [
Guangxi Nanning Pearl River Delta Fujian Pingtan, Minhou, Fuzhou, Quanzhou and Xiamen Hainan All Cities in Hainan Province Beijing Beijing Jing-Jin-Ji Tianjin Tianjin Hebei Cangzhou, Zhangjiakou, Langfang, Qinghuangdao, Tangshan, bazhou and baoding
Shandong Shandong Jinan and Qingdao
Shanxi Shanxi Taiyuan Henan Zhengzhou Hunan Changsha
Central (03301 HK)
Hubei Wuhan Anhui Hefei and Chuzhou
Chongqing Chongqing 融信中国 Sichuan Chengdu Western Gansu Lanzhou Shanxi Xian
Source: China Real Estate Information Corp., Guotai Junan International. Ronshine China
Figure 1: ASP of 70 Cities Figure 2: Inventory Turnover by City Tier in China
30.00 12.0%
10.0% 25.00 8.0%
6.0% 20.00 4.0% 2.0% 15.00 12.1 0.0%
10.00
12 13 14 15 16 17 18
11 12 13 14 15 16 17
11 12 13 14 15 16 17
11 12 13 14 15 18 17
-2.0% 16
------
------
------
------9.6
-4.0% 8.5
Feb Feb Feb Feb Feb Feb Feb
Aug Aug Aug Aug Aug Aug Aug
Nov Nov Nov Nov Nov Nov Nov
May May May May May May May May 5.00 -6.0% -8.0% 0.00
ASP YoY of Newly Construction Houses
10 10 12 14 15 16 17 11 11 12 13 13 14 15 16 17
11 13 15 17 10 12 14 16 18
10 12 14 16 18 11 13 15 17
------
------
------
ASP Mom of Newly Construction Houses -
Feb Feb Feb Feb Feb Feb Feb Feb Feb
Aug Aug Aug Aug Aug Aug Aug Aug
Nov Nov Nov Nov Nov Nov Nov Nov
May May May May May May May May May ASP YoY of Second Houses ASP MoM of Second Houses Tier-1 avg. Inventory Turnover (mths) Tier-2 avg. Inventory Turnover (mths) Tier-3 avg. Inventory Turnover (mths)
Report Source: National Bureau of Statistics of China, Wind, Guotai Junan Source: China Real Estate Information Corp., Guotai Junan International. International.
Company
See the last page for disclaimer Page 3 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Figure 3: Monthly Land Acquisition Amount in 100 Cities
] 1 r a M t h g i R _ e l b a T [
300 120.0% 100.0% 250 80.0%
60.0% 200 40.0% 150 20.0% 0.0% 100 -20.0% -40.0% 50 -60.0% August2 2018
0 -80.0%
11 12 13 14 15 16 17 18
12 13 14 15 16 17 18
16 17 11 12 13 14 15
------
------
------
Oct Oct Oct Oct Oct Oct Oct
Jun Jun Jun Jun Jun Jun Jun Jun
Feb Feb Feb Feb Feb Feb Feb Monthly Land Acquisition GFA(LHS)(mn sq.m.) Monthly Land Acquisition GFA YoY(RHS) Land Acquisition Premium Rate(RHS) Source: Wind, Guotai Junan International.
Despite recent marginal loosening, the credit environment will follow a tightening trend in the long run. The decrease in M2 YoY growth is likely to remain due to declining leverage in the financial system according to the PBOC. Since 2017, refinancing in the capital market and bond issuing tightened up for property developers. In addition, offshore financing channels will tighten for the property sector. However, the SHIBOR rate and bond issuing rate moderately decreased alongside marginal
] 2 r a M t h g i R _ e l b a T [ loosening for the credit environment in Jul. 2018. For the global market, the US has entered into an interest rate hike cycle, therefore, we expect that the PBOC will continue to reduce leverage and shrink its balance sheet in the long run. Monetary policy will be prudent and neutral, with the keynote of deleveraging. Liquidity should be tightened alongside weighted funding costs increasing. Costs of liabilities of banking systems have increased and will be at least maintained, ultimately spreading to assets within banking systems. Therefore, we expect the weighted personal mortgage rate to increase, which will exert negative effects on housing sales.
Figure 4: M2 in China Figure 5: SHIBOR
200,000 18.0% 13.5% 180,000 16.0%
160,000 14.0% 11.5% (03301 HK) 140,000 12.0% 120,000 10.0% 9.5% 100,000 8.0% 80,000 7.5% 60,000 6.0% 融信中国 40,000 4.0% 5.5% 20,000 2.0%
0 0.0% 3.5%
13 15 17 18 12 14 16
14 16 17 18 13 15
12 14 16 17 13 15
------
------
- - - - -
- 1.5%
Oct Oct Oct Oct Oct Oct
Jun Jun Jun Jun Jun Jun Jun
Feb Feb Feb Feb Feb Feb Ronshine China -0.5% Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 M2(LHS)(RMB bn) M2(RHS)(%) SHIBOR:overnight SHIBOR:1 month SHIBOR:1 year
Source: the People's Bank of China, Wind, Guotai Junan International. Source: Wind, Guotai Junan International.
Figure 6: Bond Issuing Rate in China Figure 7: Weighted Personal Mortgage Loan Rate in China
9.00 % 9.00 % 8.00 8.00 6.67 7.00 7.00 5.42 6.00 6.00 5.00 5.04 5.00 4.00 4.98 4.00 3.00 3.00 2.00 2.00
1.00 1.00
0.00 0.00
14 16 18 13 15 17
12 13 13 15 15 16 17 17 18 14 14 16 18
12 13 14 15 16 17
12 13 14 17 15 16
12 13 14 15 17 18 16
11 12 12 13 13 14 14 17 17 15 15 16 16
------
------
------
------
------
------
Report
Jul Jul Jul Jul Jul Jul Jul
Oct Oct Apr Oct Oct Apr Oct Oct Apr Apr Apr Apr
Jan Jan Jan Jan Jan Jan
Jun Jun Jun Jun Jun Jun
Mar Mar Mar Mar Mar Mar Mar
Dec Sep Dec Sep Dec Sep Dec Sep Dec Sep Dec Sep Dec
Corporate Bond Enterprise Bond Midium Term Note Mortgage Loan Rate Minimum Max
Source: China Bond, Wind, Guotai Junan International. Source: the People's Bank of China, Wind, Guotai Junan International. Company
See the last page for disclaimer Page 4 of 20 [Table_PageHeader]Ronshine China (03301 HK)
The property sector should act as a stabilizer for China’s economy, thus, the keynote of policy should support steady
and sustainable development in the long run. Currently, investment in real estate occupie] 1 sr aa largeM t proportionh g i R of_ GDP.e l Withb a T [
deep structural adjustments in the China economy, the proportion of real estate investment in GDP will decline; the property
sector should not be the main economy engine for China. Nevertheless, the property sector will still play a critical role in the economy and could drive other sectors, such as steel, coal, machinery, cement, furniture, household electrical appliances sectors, and so on. Therefore, we think that the property sector should act as a stabilizer for China’s economy. Policy tightening could be maintained in 2018 and a contraction in demand could drive sales to slow down. We think that the keynote of policy should be stability and sustainability of the property market. For the monetary environment, loans from the property sector August2 2018 account to over 22.0% of total loans from financial institutions; the government's focus should be financial market stability. Therefore, we argue that monetary policy will focus on the best tradeoff between deleverage and financial market stability. Moreover, if the property market starts to slump, the policy and credit environment related to the property sector should ease again to stabilize the property market as per the last round of policy easing measures which started on 30 Sep. 2014.
Figure 8: GDP and GDP from The Property Sector in China Figure 9: Proportion of Property Related Loans and Total Loans in China
25,000 8.0% RMB bn 19.0% 7.0% 7.0% 18.0% 6.5% 20,000 17.0% 6.0% 6.0% 16.0%
] 2 r a M t h g i R _ e l b a T [
5.5% 15,000 5.0% 15.0% 5.0% 4.0% 14.0% 4.5% 13.0% 10,000 3.0% 12.0% 4.0% 2.0% 11.0% 3.5% 5,000
1.0% 10.0% 3.0%
12 14 16 17 18 13 15
13 14 15 16 18 17
12 13 14 15 16 17 12 13 14 15 16 17
------
------
------
- - - - -
0 0.0% -
Jun Jun Jun Jun Jun Jun Jun
Mar Mar Mar Mar Mar Mar
Dec Dec Dec Dec Dec Dec
Sep Sep Sep Sep Sep Sep
Personal Housing Loans from Main Financial Institutions/Total Loans from Financial Quarterly GDP (LHS) Institutions(LHS) Property Development Loans from Main Financial Institutions/Total Loans from Financial Quartly GDP from The Property Sector (LHS) Institutions(RHS) Quartly GDP from The Property Sector/Quarterly GDP (RHS) Source: National Bureau of Statistics of China, Wind, Guotai Junan International. Source: National Bureau of Statistics of China, Wind, Guotai Junan International.
Sector Fundamentals (03301 HK)
We conservatively expect commodity housing sales to slow down in 2018. In 2017, commodity housing sales amount and 融信中国 GFA hit a historical high. During 1H18, the YoY increase in commodity house sales expanded compared to that during Jan.-May 2018. However, policy and credit environment will tighten up. With the high base in 2017, we conservatively expect commodity housing sales amount and GFA to decrease in 2018.
Figure 10: Cumulative House Sales Amount in China Figure 11: Cumulative House Sales GFA in China Ronshine China
1,800 50.0% 16,000 70.0% 1,600 40.0% 14,000 60.0% 50.0% 1,400 30.0% 12,000 1,200 40.0% 20.0% 10,000 30.0% 1,000 10.0% 8,000 20.0% 800 10.0% 0.0% 6,000 600 0.0% 4,000 -10.0% -10.0% 400 2,000 -20.0% 200 -20.0%
0 -30.0% 0 -30.0%
15 17 18 16
15 17 16
14 15 15 16 17 17 18 16
- - - -
- - -
------
15 15 16 17 18 14 16 17
14 15 15 16 16 17 17
15 17 18 16
15 17 16 18
------
- - - -
- - -
- - - -
- - - -
Jul Jul Jul
Oct Apr Oct Oct Apr Oct Apr Apr
Jan Jan Jan Jan
Apr Oct Oct Apr Apr Oct Apr Oct
Jun Jun Jun Jun
Feb Feb Feb Feb
Dec Aug Dec Aug Dec Aug Amount Sold of Commodity Houses (LHS)(RMB bn) Dec Amount Sold of Residential Houses (LHS) (RMB bn) GFA Sold of Commodity Houses (LHS)(sq.m. mn) Amount Sold YTD YoY of Commodity Houses (RHS) GFA Sold of Residential Houses (LHS) (sq.m. mn) Amount Sold YTD YoY of Residential Houses (RHS) GFA Sold of Commodity Houses (RHS) GFA Sold of Residential Houses (RHS)
Source: National Bureau of Statistics of China, Guotai Junan International. Source: National Bureau of Statistics of China, Guotai Junan International.
Report
We think that commodity housing sales will only experience limited decline. Since Jun. 2000, the property market in China
experienced five rounds of policy tightening. Commodity housing sales recorded YoY decrease during the period 2008-2009,
2012 and 2014. Between 2005-2007, commodity housing sales still recorded strong growth within a tightening policy Company environment. Therefore, the macroeconomic environment could exert key effects on the China property market. Looking forward, See the last page for disclaimer Page 5 of 20 [Table_PageHeader]Ronshine China (03301 HK)
the US has entered into an interest rate hike cycle. However, the PMI in the eurozone has moved down somewhat and China’s
economy is likely to fuel uncertainty due to the Sino-US trade war. Moreover, tightening of] shantytown1 r a M t redevelopmenth g i R _ approvalse l b a T [
will curb housing demands, especially in lower-tier cities. Nevertheless, urbanization and housing replacement should still the
main drivers for housing demand and will lead to sustainable housing demand in 2018-2020. Considering that commodity housing sales hit historical highs and the "Silver Era" for the property market, we estimate that commodity housing sales YoY growth range and GFA YoY growth range in 2018 should be -5% to 0% and -10% to -5%, respectively.
Figure 12: China Commodity House Sales and GDP Figure 13: PMI of Major Economies August2 2018
140.0% 20.0% 65.0 120.0% 15.0% 60.0 100.0% 55.0 80.0% 10.0% 50.0 60.0% 5.0% 45.0 40.0% 40.0 20.0% 0.0% 35.0 0.0%
-5.0% 30.0
00 01 02 06 07 12 13 17 03 04 05 08 09 10 11 14 15 16
01 02 06 07 08 12 13 14 18 03 04 05 09 10 11 15 16 17
------
------
-20.0% -
08 10 11 13 14 16 18 07 09 12 15 17
08 09 11 13 14 16 17 07 10 12 15 18
07 08 10 11 13 15 16 09 12 14 17
08 10 11 13 15 16 07 09 12 14 17
------
------
------
Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun
Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec
-40.0% -10.0%
Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun Jun
Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar Mar
Dec Sep Dec Sep Dec Sep Dec Sep Dec Sep Dec Sep Dec Sep Sep Dec Sep Dec Sep Dec Sep Dec
GFA Sold YTD YoY of Commodity Houses (LHS) Amount Sold YTD YoY of Commodity Houses (LHS) PMI:China Manufacturing PMI: America YoY of Chinese GDP (RHS) YoY of American GDP (RHS) Manufacturing PMI: Japan
] 2 r a M t h g i R _ e l b a T [
YoY of Euro Zone GDP (RHS) Manufacturing PMI: Euro Zone The Threshold of 50 That Separate Expansion from Contraction Source: National Bureau of Statistics of China, Guotai Junan International. Source: Government statistics from respective nations, Guotai Junan International.
ASP is likely to remain stable in 2018 despite limited decline of commodity housing sales. There were 3 periods of ASP decline from 2006-1H18. Stock augmentation and investment enlargement in the previous year led to capital pressures on property developers. This made property developers decease ASP to promote sales. Thus, we see ASP declining. However, in
2017, we did not see sound YoY increase of GFA newly started or for investment, attributing to the cooling down of the property sector by the tightening policy environment. Even saleable GFA still recorded YoY decrease. Therefore, we expect moderate capital pressure for property developers in 2018, thus, no concern about ASP slump in 2018.
(03301 HK)
Table 2: Critical Property Development and Sales Data Related to ASP YoY: Commodity YoY: GFA Newly
YoY: Investment YoY: Saleable GFA YoY: ASP 融信中国 Houses Sold GFA Started 2006 12.2% 15.1% 22.1% -0.9% 6.3% 2007 23.2% 19.4% 30.2% -7.5% 11.4% 2008 -19.7% 2.3% 23.4% 38.3% -0.8%
2009 43.6% 12.5% 16.1% 7.1% 9.1% Ronshine China 2010 10.1% 40.7% 33.2% 0.0% 7.6% 2011 4.9% 16.2% 27.9% 26.1% 1.6% 2012 1.8% -7.3% 16.2% 27.0% -0.1% 2013 17.3% 13.5% 19.8% 35.2% 9.2% 2014 -7.6% -10.7% 10.5% 26.1% -4.3% 2015 6.5% -14.0% 1.0% 15.6% 0.2% 2016 22.5% 8.1% 6.9% -3.2% 10.5% 2017 7.7% 7.0% 7.0% -15.3% 5.6% 1H18 3.3% 11.8% 9.7% -14.7% 5.8% Source: National Bureau of Statistics of China, Wind, Guotai Junan International.
Land area sold will slightly decrease in 2018. Saleable GFA consistently decreased, in line with relatively low stock-to-sales ratios for the property sector. Local governments enlarged land supplies in areas where there were extensive stock shortages.
Thus, land area sold rebounded in 2017. However, the stock-to-sales ratio still remains at a proper level and may increase in
Report
2H18, with forecasted slight decrease in commodity housing sales in 2018. Moreover, expected tightening up of the monetary
environment will also restrict leverage enlargement for property developers. Therefore, we project that land area sold in 2018
may slightly decrease. Company
See the last page for disclaimer Page 6 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Figure 14: Land Area Sold and Saleable GFA in China Figure 15: Stock-to-Sales Ratios in China
25.0 Months
] 1 r a M t h g i R _ e l b a T [
800 40.0% 23.0 700 30.0% 600 20.0% 21.0
500 10.0% 19.0 400 0.0% 17.0 300 -10.0% 200 -20.0% 15.0 100 -30.0% 13.0
0 -40.0% ProperLeverl 2 August2 2018
11.0
15 16 17 18
15 16 17 18
14 15 15 16 16 17 17 18
14 15 16 17 15 16 17
- - - -
- - - -
------
- - - -
- - -
9.7
Oct Apr Oct Apr Oct Apr Oct Apr
Jun Jun Jun
Jun 9.0
Feb Feb Feb Feb
Dec Dec Dec Dec Aug Aug Aug Accumulated Land Area Acquisition (LHS) (sq.m. mn) 7.0 Saleable GFA (LHS) (sq.m. mn) Accumulated Land Area Acquisition YTD YoY (RHS) 5.0 Saleable GFA YTD YoY (RHS) (%) Mar-10 Mar-11 Mar-12 Mar-13 Mar-14 Mar-15 Mar-16 Mar-17 Mar-18
Source: National Bureau of Statistics of China, Guotai Junan International. Source: China Real Estate Information Corp., Guotai Junan International.
We estimate GFA newly started to record flat YoY increase in 2018. We project a slight decrease of land area sold in 2018. However, the gap between GFA newly started and commodity house sold GFA remained low as at May 2018. Therefore, we think that the YoY growth of GFA newly started will record flat YoY in 2018.
] 2 r a M t h g i R _ e l b a T [ Figure 16: GFA Newly Started in China Figure 17: Gap Between GFA Newly Started and Commodity House Sales GFA in China
2,000 25.0% 2,000 1,800 20.0% 1,800
1,600 15.0% 1,600
1,400 10.0% 1,400
1,200 5.0% 1,200 1,000 1,000 0.0% 800
800 -5.0% 600 600 -10.0% 400 400 -15.0% 200 200 -20.0%
0 (03301 HK)
0 -25.0%
15 16 17 18
15 16 17 18
14 15 15 16 16 17 17 18
14 15 16 17
15 16 17
- - - -
- - - -
------
------
14 15 15 16 17 17 16
17 18 15 16
16 17 15
15 18 16 17
15 16 17 18
------
- - - -
- - -
- - - -
- - - -
Oct Apr Oct Apr Oct Apr Oct Apr
Jun Jun Jun Jun
Feb Feb Feb Feb
Aug Aug Aug Dec Dec Dec Dec
Jul Jul Jul
Jan Jan Jan Jan
Mar Mar Mar Mar
Sep Sep Sep
Nov Nov Nov Nov
May May May May GFA Sold of Commodity Houses (sq.m. mn) GFA Newly Started (LHS) (sq.m. mn) GFA Newly Started YTD YoY (RHS) (%) GFA Newly Started(sq.m. mn) 融信中国 Gap Betweem GFA Sold and GFA Newly Started (sq.m. mn) Source: National Bureau of Statistics of China, Guotai Junan International. Source: National Bureau of Statistics of China, Guotai Junan International.
We expect investment to record 2.0% YoY increase in 2018. Monetary policy will be based around prudent and neutral
targets. Liquidity should tighten up. Funds of property companies will face pressure, which will exert negative effects on Ronshine China investment. However, we estimate that GFA newly started will record flat YoY increase in 2018. This could drive investment to increase approximately 2.0% YoY in 2018, which is still a considerable absolute amount.
Figure 18: Property Development Investment in China Figure 19: Main Sources of Funds for Property Companies in China
12,000 16.0% 70.0% 14.0% 10,000 60.0% 12.0% 50.0% 8,000 10.0% 40.0% 6,000 8.0% 30.0% 6.0% 4,000 20.0% 4.0% 2,000 10.0% 2.0% 0.0%
0 0.0%
14 15 15 16 17 17 16 18
15 17 14 16
16 15 17
15 16 17 18
15 16 17
-10.0% 18
------
------
- - - -
- - - -
14 15 15 16 18 16 17 17
14 15 16 16 17 15 17
15 16 17 18
17 18 15 16
------
------
- - - -
- - - -
Oct Apr Oct Oct Apr Oct Apr
-20.0% Apr
Jun Jun Jun Jun
Feb Feb Feb Feb
Dec Aug Dec Dec Aug Dec Aug
Oct Apr Oct Apr Apr Oct Apr Oct
Jun Jun Jun Jun
Feb Feb Feb Feb
Dec Dec Dec Dec
Aug Aug Aug -30.0% Investment（LHS）（RMB bn)
（ ）（ Report Investment in Residential Houses LHS RMB bn) Cumulative YoY Growth: Domestic Loans Investment YTD YoY (RHS) Cumulative YoY Growth: Self-raising Funds Investment in Residential Houses YTD YoY (RHS) Cumulative YoY Growth: Deposits and Advance Payments Cumulative YoY Growth: Personal Mortgage
Source: National Bureau of Statistics of China, Guotai Junan International. Source: National Bureau of Statistics of China, Guotai Junan International. Company
See the last page for disclaimer Page 7 of 20 [Table_PageHeader]Ronshine China (03301 HK)
We argue that steady fundamentals will remain. Despite the tightening environment, we still think that the policy and credit
environment will focus on the steady and sound development of the property sector. ] Commodity1 r a M housingt h g i salesR _ shoulde l b stilla T [
remain at a considerable level in absolute terms due to urbanization and housing replacement. We also expect stable ASP and
decreasing trend of saleable areas. In addition, investment will remain at a considerable absolute amount.
Figure 20: Key Property Developments and Sales Data
30.0% 2 August2 2018 20.0% 10.5% 7.7% 13.5% 8.1% 22.5% 15.8% 8.8% 6.5% 10.0% 19.8% 7.0% 7.0% 0.0% 2.0% 17.3% 1.0% 6.9% 0.0% 2013 2014 2015 2016 2017 2018F -10.0% -10.7% -2.0% -7.6% -14.0% -14.0% -7.0% -20.0% -3.4% -30.0% -31.7% -40.0%
GFA Newly Started YTD YoY Land Area Sold YTD YoY Investment YTD YoY GFA Sold of Commodity Houses
Source: National Bureau of Statistics of China, Guotai Junan International.
] 2 r a M t h g i R _ e l b a T [
Sector Characteristics
Property leaders with four core competitive advantages could maintain sustainable growth prospects in the second half of the sliver era. We argue that four core advantages for property leaders: (1) brand and pipeline, (2) project development ability, (3) financing ability, and (4) land replenishment ability. For example, quality brand and favorable pipeline will result in positive sales record with higher ASP, thus, higher top line and gross margin; strong development ability could result in lower construction costs and timely profit recognition; positive financing ability will decrease financial costs and decrease operating risks; and powerful land replenishment ability can support scale expansion with low unit land costs. Therefore, property leaders
with these four core competitive advantages are likely to gain more market share with higher profitability amidst market (03301 HK) consolidation, thus, obtaining sustainable growth prospects in the second half of the sliver era.
Figure 21: Core Competitive Powers for Property Developers 融信中国
Brand and Pipeline Financing Ability
Affect Top Line and Margins Affect Financial Costs, Operating Risk •Quality brand lead to higher ASP; and Potential Expand Ability •Favorable and standardized •Strong financing ability could help pipelines could result in a larger decrease financial costs; scale; •Strong financing ability leads to less •Quality brand and favorable capital pressures and decrease the
pipelines also means less advertising operating risks; Ronshine China costs. •Strong financing ability makes an advantage on land replenishment and represent a expand ability.
Core Competitive Project Development Powers Land replenishment Ability Ability
Affect Construction Costs, Profit Affect Gross Margin, Operating Risk Recognition and Operating Process and Potential Expand Ability. •Strong project development ability •Strong land replenishment ability will decrease construction and SG&A will bring sufficient lands for future costs; development; •Weak project development ability •Strong land replenishment ability could delay the house could decrease unit land cost and delivering, which could delay the protect margins; profit recognition and balance sheet •Strong land replenishment will recovery; decrease the probability of losses in •Weak project development ability some specific projects, thus declining will bring delay in operating process operating risk. leading to higher construction costs and presale delaying.
Source: Guotai Junan International.
Report
Company
See the last page for disclaimer Page 8 of 20 [Table_PageHeader]Ronshine China (03301 HK)
COMPANY OVERVIEW
] 1 r a M t h g i R _ e l b a T [
Company Profile
Ronshine China Holdings Limited ("Ronshine China" or "the Company") is principally engaged in property development, targeting customers from middle to upper-middle income households. Ronshine China was funded in 2003 and has been listed on the main board of the stock exchange of Hong Kong since 2015. The Company’s revenue is mainly derived from property sales, construction contracts and rental income. According to CRIC, Ronshine China ranked 25th in terms August2 2018 of contracted sales amount during 1H18.
Figure 22: Shareholder Structure
Mr. Ou Public Shareholders
63.44% 36.56% s
] 2 r a M t h g i R _ e l b a T [
The Company
Source: the Company, Guotai Junan International. Notes: Shareholder structure based on the outstanding share number of 1,598,300,500 after completion of the placing and completion of the subscription on 6 Jun. 2018; Mr. Ou, an executive Director, a controlling Shareholder, the chief executive officer and the chairman of the Company.
Contracted Sales (03301 HK)
Riding on sufficient saleable resources and favorable pipeline, contracted sales will fast grow. Contracted sales increased from RMB11,917 mn in 2015 to RMB50,235 mn in 2017 or at a CAGR of 105.3% during 2015-2017. Contracted sales 融信中国 target in 2018 was set at RMB120.0 bn, indicating 138.9% YoY increase. Saleable resources is abundant, amounting to RMB180.0 bn in 2018 and hinting a target sale-through rate of 66.7%. In addition, the Company owns a quality brand and favorable pipeline, with focus on middle to high-end housing demand. That is, we think that the Company's 2018 sales target is
achievable. Ronshine China extended fast contracted sales expansion during Jan.-Jul. 2018. Contracted sales amounted to Ronshine China RMB65,600 mn, up 244.3% YoY. Contracted GFA increased to 3,009,000 sq.m., up 283.8% YoY. ASP reached RMB21,801 per sq.m. So far, the Company achieved 54.7% of its sales target in 2018.
Figure 23: The Company’s Contracted Sales Amount Figure 24: The Company’s Monthly Contracted Sales
70,000 300.00% RMB mn 14.00 25,000 244.3% 60,000 250.00% 12.00 20,000 50,000 10.00 200.00% 8.00 15,000 40,000 150.00% 6.00 103.9% 65,600 10,000 30,000 106.8% 4.00 100.00% 5,000 20,000 50,235 2.00 24,639 10,000 50.00% 0.00 0
11,917
0 0.00% 2015 2016 2017 Jan.-Jul. 2018
Contracted Sales YoY Increase Contracted Sales (RMB )(LHS) ASP (RMB/sqm.)(RHS) Report
Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.
Company
See the last page for disclaimer Page 9 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Figure 25: The Company’s Contracted Sales Amount Figure 26: The Company’s Contracted Sales GFA Breakdown by City in 2017 Breakdown by City in 2017
] 1 r a M t h g i R _ e l b a T [
Others, 11% Hangzhou, 16% Others, 21% Suzhou , 2% Zhengzhou, 3% Hangzhou, 33% Xian, 3%
Zhangzhou, 3% Suzhou , 1%
Xiamen, 4% Zhengzhou, 3% 2 August2 2018 Xian, 4% Fuzhou, 23% Fuyang, 7% Zhangzhou, 5% Xiamen, 3% Shanghai, 11% Fuzhou, 23% Shanghai, 6% Fuyang, 18%
Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.
Land Bank
Abundant land bank in high-tier cities will support the Company’s scale expansion. As at 31 Dec. 2017, the Company
] 2 r a M t h g i R _ e l b a T [ covered 33 cities with 133 projects. Total GFA and attributable GFA reached 23.15 mn sq.m. and 12.67 mn sq.m., respectively. In addition, around 60.2% of its total land bank exposed in the prime area of the tier-1 and tier-2 cities. We estimate the total saleable resources based on this land bank to be around RMB496.82 bn. Alongside 14.77 mn sq.m. of its land bank under construction, sufficient future saleable resources will translate into fast scale expansion of the Company.
Figure 27: The Company’s Land Bank Breakdown by Figure 28: The Company’s Land Bank Breakdown by Region as at 31 Dec.2017 Development Phase as at 31 Dec.2017
Jing-Jin-Ji, 1% Greater Bay
Area, 0% Completed Cheng-Yu, 2% Properties Held for Sale, 7% Central, 5%
Western, 11% (03301 HK)
Held for Future Development, 29% Yangtze River
Delta, 53% 融信中国 Western Under Taiwan, 28% Consturction, 64%
Ronshine China Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.
Proper unit land costs could protect the Company’s gross margin. As at 31 Dec. 2017, the cost per sq.m. of the Company’s land bank was RMB6,568, only 30.6% of ASP in 1H18. We expect gross margin to bottom out in 2018-2020.
Figure 29: Unit Land Cost for Land Bank Acquired
16,000 RMB per Sq.m.
14,000
12,000
10,000
8,000 14,999 6,000 10,098 9,413
4,000 7,893
2,000 4,444 1,527 1,315
0 Report Greater Bay Jing-Jin-Ji Yangtze Chengyu Western Western Central Area River Delta Taiwan
Source: the Company, Guotai Junan International. Company
See the last page for disclaimer Page 10 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Strong M&A capacity protect sustainable development for the Company. On 27 Jul. 2017, the Company acquired 55%
interest of Ningbo Hailiang and Anhui Hailiang ("Hailiang") for total consideration of RMB2,897] 1 mn.r a AsM att 30h Jung i . 2017,R _ Hailiang'se l b a T [
GFA under construction and GFA for future development was 4,974,495 sq.m. and 1,107,498 sq.m., respectively. Moreover, the
Company acquired land parcels in Zhengzhou with total GFA of 295,335 sq,m. at a consideration of RMB802 mn on 9 Feb. 2018.
Ronshine China revealed strong land replenishment capacity through M&As. That is, we expect sustainable development for the Company.
Financing Capacity 2 August2 2018
Shares placing and senior notes issuing hint a steady financing channel, which could help alleviate financing pressure. The Company implemented placement of shares on 30 Oct. 2017 and 6 Jun. 2018, respectively, with total gross proceeds of HK$2.3 bn. This could help decrease the Company's net gearing ratio. During Mar.-Jul. 2018, the Company issued 3-year senior notes amounting to USD0.65 bn with a coupon rate of 8.25%. Alongside strong cash inflow from contracted sales, the steady financing channel could help the Company to alleviate financing pressure.
Ronshine China's solvency risks should be limited, riding on fast contracted sales growth and steady financing channel. The market expressed large concerns about high net gearing ratio for players in the property sector because of solvency risks, especially amidst the credit crunch. Sources of funds for property developers mainly include cash collections from contracted sales and cash stemming from financing channels. We, therefore, argue that fast contracted sales with steady
] 2 r a M t h g i R _ e l b a T [ financing channel will provide enough funds and alleviate solvency risks despite high net gearing ratio. For Ronshine China, we expect fast contracted sales growth. The Company also maintained a steady financing channel due to the issuing of senior notes and shares placing. Moreover, trust loans only accounted for 7.0% of the Company's total loans. Therefore, the new asset management rules should exert slightly negative effects on Ronshine China. We also forecast the Company’s net gearing ratio to gradually fall to 107.2% in 2020. Overall, fast contracted sales and steady financing channels hint abundant funds sources and alleviate solvency risks, that is, limited solvency risks for Ronshine China.
(03301 HK)
融信中国 Ronshine China
Report
Company
See the last page for disclaimer Page 11 of 20 [Table_PageHeader]Ronshine China (03301 HK)
FINANCIAL ANALYSIS
] 1 r a M t h g i R _ e l b a T [
Revenue Analysis
Ronshine China derives its revenue principally from sales of properties. The Company also cooperated with local governments in constructing resettlement housing units adjacent to certain projects of the Company. In addition, Ronshine China generates rental income from leasing of investment properties and others. The Company derived over 97.5% of its revenue from sales of properties during 2015-2017. August2 2018
We expect revenue derived from sales of properties to increase from RMB29,589 mn in 2017 to RMB96,423 mn in 2020, or at a CAGR of 48.3% during 2017-2020. Firstly, the Company’s sizable land bank in prime sites in higher-tier cities and proven land acquisition capability will provide sufficient saleable resources to support future contracted sales, thus indicating high growth potential. Secondly, Ronshine China focuses on developing quality and customized products, targeting demand for home upgrades along with strong brand recognition. The Company’s pipeline should be favorable and competitive. Moreover, we still expect fast contracted sales growth with forecasted 138.9% YoY increase in 2018. In addition, the Company’s pre-sale proceeds received from customers amounted to approximately RMB41,244.1 mn as at 31 Dec. 2017. Advance payments from customers represent sales proceeds received from buyers in connection with the Company’s pre-sale of properties and typically
takes 18 to 24 months before the Company recognizes revenue, the time it takes from] commencement2 r a M t h g i of R pre_ -e salel b toa T [
construction completion. Finally, we think the Company has remarkable expansion potential from revenue from sales of properties due to its sizable land bank, favourable and competitive pipeline, fast contracted sales expansion and abundant advance payments from pre-sales of properties.
We expect revenue from construction contracts to increase from RMB560 mn in 2017 to RMB1,316 mn in 2020, and revenue from rental income and others to increase from RMB193 mn in 2017 to RMB294 mn in 2020. Revenue from
construction contracts with local PRC governments was generated from the construction of resettlement housing adjacent to certain land replenishments of the Company. As the Company will maintain steady land replenishment initiatives in the future, we expect stable growth for revenue from construction contracts. We project Ronshine China’s construction contracts income to
increase to RMB761 mn, RMB1,012 mn and RMB1,316 mn in 2018-2020, respectively. Rental income mainly includes recurring (03301 HK) revenue from a shopping mall in Fuzhou and an office building in Shanghai and hotel operations. With completed investment properties gradually turning into mature ones, we estimate the Company’s rental income to steadily grow at a CAGR of 15.0%
from 2017 to 2020. 融信中国
We expect total revenue to increase from RMB30,341 mn in 2017 to RMB98,033 mn in 2020, or at a CAGR of 47.8% during 2017-2020. In 2018-2020, we expect revenue from sales of properties to increase YoY by 95.2%, 38.3% and 20.7%,
respectively, revenue from construction contracts to increase at a CAGR of 33.0% from 2017 to 2020, and revenue from rental Ronshine China income and others to increase at a CAGR of 15.0% during the same period. Overall, we expect the Company’s total revenue to grow YoY by 93.6%, 38.2% and 20.8% in 2018-2020, respectively.
Table 3: Ronshine China’s Segmental Revenue Segment (RMB mn) 2015A 2016A 2017A 2018F 2019F 2020F CAGR (2017-2020) - Sale of Properties 7,327 11,114 29,589 57,758 79,886 96,423 48.3% - Construction Contracts 88 178 560 761 1,012 1,316 33.0% - Rental Income and Others 0 80 193 222 256 294 15.0% Total 7,415 11,372 30,341 58,741 81,154 98,033 47.8% YoY 53.4% 166.8% 93.6% 38.2% 20.8% Source: the Company, Guotai Junan International.
Table 4: Ronshine China’s Segmental Revenue by Proportion
Segment 2014A 2015A 2016A 2017F 2018F 2019F Report - Sale of Properties 98.8% 97.7% 97.5% 98.3% 98.4% 98.4% - Construction Contracts 1.2% 1.6% 1.8% 1.3% 1.2% 1.3%
- Rental Income and Others 0.0% 0.7% 0.6% 0.4% 0.3% 0.3% Company Total 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Source: the Company, Guotai Junan International. See the last page for disclaimer Page 12 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Gross Profit Analysis
] 1 r a M t h g i R _ e l b a T [
We expect overall gross margin to bottom out and remain at over 22.5% during 2018-2020. The Company's cost of sales mainly includes cost of construction, land use rights, interest capitalized and tax surcharge. The Company’s gross margin decreased from 20.2% in 2016 to 16.6% in 2017, primarily because the gross margin of some properties (from the acquisition of Hailiang) delivered in 2H17 amounted to approximately 0.0%. With Ronshine China's quality brand, favorable pipeline and cost controlling of construction process, we expect gross margin improvement of these projects. In addition, the Company's unit land cost was only 30.6% of ASP in Jan.-Jun. 2018. We also expect steady ASP due to the steady fundamentals of property markets August2 2018 during 2018-2020. Therefore, the Company's gross margin is likely to bottom out.
Ronshine China’s gross profit is expected to grow along with fast revenue expansion during 2018-2020. Based on our revenue and gross margin forecasts, the Company’s gross profit is expected to be RMB13,219 mn/ RMB19,459 mn/ RMB24,368 mn in 2018/ 2019/ 2020, respectively, representing a CAGR of 69.3% during 2017 to 2020.
Figure 30: Ronshine China’s Gross Profit and Gross Margin
30,000 RMB mn 40.0%
36.6% 35.0% 25,000
30.0% ] 2 r a M t h g i R _ e l b a T [
20,000 24.0% 24.9% 22.5% 25.0% 20.2% 15,000 16.6% 20.0% 24,368 15.0% 10,000 19,459 10.0% 13,219 5,000 5.0% 5,025 2,714 2,302 0 0.0% 2015A 2016A 2017A 2018F 2019F 2020F Gross Profit Gross Margin
Source: the Company, Guotai Junan International.
(03301 HK)
Operating Expenses Analysis
Ronshine China’s administrative expenses are forecasted to be RMB1,714 mn/ RMB2,391 mn/ RMB2,917 mn in 2018/ 融信中国 2019/ 2020, respectively. Administrative expenses primarily consist of staff costs for administrative personnel, other taxes, office and travel expenses related to administrative departments, entertainment expenses, audit fees, office lease expenses, depreciation and amortisation, and others. The increase in administrative expenses should be in line with contracted sales
expansion. Therefore, we anticipate that the administrative expenses ratio will remain at around 2.9% in 2018-2020. Ronshine China
We expect selling and marketing costs to amount to RMB1,600 mn/ RMB2,233 mn/ RMB2,725 mn in 2018/ 2019/ 2020, respectively. Selling and marketing costs mainly include staff costs for sales personnel, advertisement expenses, office and travel expenses related to marketing departments, property management fees, and others. For the same reason, we expect selling and marketing costs ratio to remain at around 2.8% in 2018/ 2019/ 2020, respectively.
Report
Company
See the last page for disclaimer Page 13 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Figure 31: Ronshine China’s Administrative Expenses Ratios and Selling and Marketing Costs Ratios
] 1 r a M t h g i R _ e l b a T [
6% 5.3% 5%
4.2%
4% 3.7% 4.2% 2.9% 3.0% 2.9% 2.9% 3% 2.8% 2% 2.7% 2.7% 2.8%
1% August2 2018
0% 2015A 2016A 2017A 2018F 2019F 2020F
Selling and Marketing Costs Ratio Administrative Ratio
Source: the Company, Guotai Junan International. Notes: the administrative ratio is calculated as administrative expenses divided by total revenue; the selling and marketing costs ratio is calculated as selling and marketing costs expenses divided by total revenue.
Operating Profit Analysis
CAGR of operating profit is expected to be 64.7% during 2018-2020. We estimate that the ] Company2 r a M ’s t grossh g profiti R will_ e recordl b a T [
fast growth during 2018-2020. Furthermore, administrative expenses ratio and selling and marketing costs ratio are projected to remain at a stable level in 2018-2020. Therefore, we expect operating profit to increase from RMB4,484 mn in 2017 to RMB20,037 mn in 2020.
Figure 32: Ronshine China’s Operating Profit and Operating Margin
25,000 RMB mn 30.0%
27.7%
25.0% 20,000 20.4% 19.7% 18.5% 17.6% 20.0% 15,000 14.8%
15.0% (03301 HK)
10,000 20,037 15,952 10.0%
5,000 10,854 5.0% 4,484 融信中国 2,053 2,001 0 0.0% 2015A 2016A 2017A 2018F 2019F 2020F Operating Profit Operating margin
Source: the Company, Guotai Junan International.
Ronshine China Finance Costs
We expect finance (costs)/income to be (RMB18 mn)/ RMB64 mn/ RMB65 mn in 2018-2020, respectively. The Company's average financing cost amounted to 6.9% in 2017. Amid the tightening monetary environment, we expect the Company's average financial costs to increase in 2018. In addition, we expect that the scale of the Company's total debts will increase due to continuous investment in its existing projects. Thus, we project increasing financial costs during 2018-2020. With forecasted high capitalization rate of interest, financial costs will be RMB39 mn/ RMB45 mn/ RMB51 mn during 2018-2020. In addition, RMB depreciation against the USD during Jun. 2018 will lead to net foreign exchange losses in 2018. However, we expect increasing financial income due to cash equivalents increasing and rate hikes.
Income Tax
Effective tax rate is expected to be 44.8%/ 46.1%/ 46.9% in 2018-2020, respectively. In 2017, some projects from the Report acquisition of Hailiang recorded losses. PRC corporate income tax is calculated based on each project. Therefore, some losses from those projects should not be deductible for the Company, thus, leading to higher effective tax compared to 2016 of 47.0% in
2017 . Because forecasted gross margin improvement of the projects from the acquisition of Hailiang, we expect effective tax Company rate to decrease in 2018. Given expected gross margin improvement in 2019-2020, we project more LAT to be incurred in 2019-2020, therefore, resulting in higher effective tax in 2019 and 2020. We expect Ronshine China’s income tax expense to be See the last page for disclaimer Page 14 of 20 [Table_PageHeader]Ronshine China (03301 HK)
RMB4,997 mn/ RMB7,544 mn/ RMB9,605 mn in 2018-2020, respectively.
] 1 r a M t h g i R _ e l b a T [
Figure 33: Ronshine China’s Income Tax Expense and Effective Tax Rate 12,000 47.0% 46.1% 46.9% 50.0% RMB mn 44.8% 42.9% 45.0% 10,000 40.0% 33.7% 35.0% 8,000 30.0%
6,000 25.0% 2 August2 2018 9,605 20.0% 4,000 7,544 15.0%
4,997 10.0% 2,000 2,343 5.0% 1,058 867 0 0.0% 2015A 2016A 2017A 2018F 2019F 2020F Income tax expense Effective tax rate
Source: the Company, Guotai Junan International.
Net Profit Analysis
We expect CAGR of underlying net profit to be 67.0% during 2018-2020. Projected quick operating profit expansion will drive
] 2 r a M t h g i R _ e l b a T [
fast growth of shareholders’ net profit. We estimate shareholders’ net profit to increase to RMB3,778 mn, RMB5,312 mn and RMB6,478 mn in 2018-2020, respectively. If we exclude fair value gains on investment properties, underlying net profit is expected to increase to RMB3,476 mn, RMB4,976 mn and RMB6,086 mn in 2018-2020.
Figure 34: Ronshine China’s Shareholders’ Net Profit Figure 35: Ronshine China’s Underlying Net Profit and and Shareholders' Net Profit Margin Underlying Net Profit Margin 7,000 25.0% 7,000 25.0% RMB mn RMB mn
6,000 19.3% 6,000 19.3%
20.0% 20.0% 5,000 5,000
15.0% 15.0% 4,000 4,000 11.4% 6,478 3,000 3,000 6,086 10.0% 8.5% 10.0% (03301 HK) 6.5% 6.4% 6.6% 6.2% 2,000 5.5% 2,000 5.9% 6.1% 5,312 4.3% 3,778 5.0% 3,476 4,976 5.0% 1,000 1,000 1,680 1,433 1,292 1,433 1,307 971 融信中国 0 0.0% 0 0.0% 2015A 2016A 2017A 2018F 2019F 2020F 2015A 2016A 2017A 2018F 2019F 2020F Shareholders' net profit Net Margin Underlying net profit Net Margin
Source: the Company, Guotai Junan International. Source: the Company, Guotai Junan International.
Ronshine China ROA and ROE
Ronshine China’s ROE is expected to rebound to 31.0% in 2018 due to improvement in profitability, and then remain at around 31.5% in 2019 and 2020. The Company’s ROA is expected to gradually increase during 2018-2020. With total revenue expansion and profitability recovering in 2018, we expect ROE to increase by 11.1 ppts to 31.0% in 2018. Due to projected stable profitability in 2019 and 2020, we expect stable ROE in 2019 and 2020.
Figure 36: Ronshine China’s ROA and ROE
60% 53.8%
50%
40% 31.0% 32.7% 30% 30.9% 22.0% 19.0%
20% Report 10% 4.2% 3.0% 3.3% 3.3% 2.0% 0% 2.5%
2015A 2016A 2017A 2018F 2019F 2020F
ROE ROA Company
Source: the Company, Guotai Junan International. See the last page for disclaimer Page 15 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Net Gearing
] 1 r a M t h g i R _ e l b a T [
We expect the Company’s leverage ratio to remain high during 2018-2020, consistent with its scale expansion. With fast
contracted sales expansion, increasing pre-sales proceeds received from customers will result in total liabilities to total assets gradually increasing from 81.9% in 2017 to 85.5% in 2020, representing a high leverage ratio level. With increasing cash collections from contracted sales, we expect net gearing ratio to fall from 159.4% in 2017 to 107.2% in 2020. However, to enlarge business scale, the Company is projected to maintain high leverage ratio to bring more saleable resources. Therefore, we expect
net gearing ratios to remain at a high level. August2 2018
Table 5: Roshine China’s Leverage Ratios 2015A 2016A 2017A 2018F 2019F 2020F Net gearing ratio (%) 267.2 116.9 159.4 127.3 118.6 107.2 Total liabilities to total assets (%) 85.4 76.7 81.9 84.2 84.9 85.5 Source: the Company, Guotai Junan International.
Cash Flow Analysis
We expect net operating cash inflow in 2018 and 2020 but net operating cash outflow in 2019. Due to strong property
] 2 r a M t h g i R _ e l b a T [ sales and gross margin improvement in 2018, we expect higher cash collection in 2018, thus leading to net operating cash inflow. However, to bring more saleable resources for business scale expansion, more capital is projected to be invested in 2019, which will generate net operating cash outflow in 2019. More saleable resources are estimated to ultimately translate into contracted sales, which will generate net operating cash inflow in 2020. Riding on the development of investment properties, we expect net investing cash outflow during 2018-2020. In order to support the Company's scale expansion, we still expect net financing cash inflow during 2018-2020. Overall, cash and cash equivalents are still expected to increase from RMB18,473 mn in 2017 to RMB31,642 mn in 2020, which could support the normal operation of the Company. Thus, we still think that the Company will
operate smoothly and expand its business scale under the high leverage ratio level.
(03301 HK)
融信中国 Ronshine China
Report
Company
See the last page for disclaimer Page 16 of 20 [Table_PageHeader]Ronshine China (03301 HK)
VALUATION
] 1 r a M t h g i R _ e l b a T [
We Initiate Ronshine China with "Buy" investment rating. Contracted sales is likely to extend fast growth on the grounds of
sufficient saleable resources and favorable pipeline. Abundant land bank in high-tier cities as well as strong M&A capacity will support the Company’s scale expansion. Riding on proper unit land costs, we think that gross margins will bottom out during 2018-2020. Shares placement and senior notes issuance indicate a steady financing channel, which could help alleviate financing pressures. Despite a high leverage ratio, we expect limited solvency risk because of strong contracted sales growth and steady financing channel. We set the Company's target price at HK$16.55, which implies a 45% discount to its 2018F NAV August2 2018 of HK$30.09 per share, 6.2x underlying 2018 PER and 1.5x 2018 PBR. Therefore, we rate Ronshine China "Buy". The 45% discount on NAV reflects risks, for instance, 1) property sales might miss our expectations or 2) the Company may face solvency risks.
Table 6: Breakdown of Ronshine China’s 2018F NAV NAV/share (RMB m) (HK$) % of NAV % of GAV Development properties 73,186 90,354 187.9% 85.3% Investment properties 12,612 15,571 32.4% 14.7%
Gross asset value 85,799 105,924 ] 220.2%2 r a M t h g i R _ e 100.0%l b a T [
Net debt -46,840 -57,827 -120.2% NAV 38,959 48,097 100.0% NAV/Share 24.38 30.09 Source: the Company, Guotai Junan International.
Figure 37: Ronshine China's 3-Year Historical P/B Figure 38: Ronshine China's 3-Year Historical P/E
(03301 HK)
融信中国
Ronshine China Source: Bloomberg, Guotai Junan International. Source: Bloomberg, Guotai Junan International.
Report
Company
See the last page for disclaimer Page 17 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Table 7: Peers Comparison
Company Stock Code Mkt Cap (HK$ m) Last Price HK$ PE PB] 1 r a M t h g D/Y%i R _ ROEe l EV/EBITDAb a T [
2018F 2019F 2020F 2018F 2019F 2020F 2018F 2018F 2018F
HK listed large developers with major revenue from mainland
China Overseas Land & Invest 00688 HK 258,018.5 23.550 6.4 5.4 4.7 0.9 0.8 0.7 4.0 14.5 5.2 China Evergrande Group 03333 HK 265,254.1 20.100 5.9 4.9 4.3 1.6 1.4 1.1 10.3 32.7 5.7 China Resources Land Ltd 01109 HK 187,481.9 27.050 7.6 6.5 5.6 1.2 1.0 0.9 4.5 16.4 5.1 Country Garden Holdings Co 02007 HK 239,001.0 11.020 6.1 4.6 3.8 1.7 1.3 1.1 5.6 29.4 4.7
Longfor Group Holdings Ltd 00960 HK 127,502.2 21.500 8.7 6.9 5.8 1.4 1.2 1.1 4.5 17.3 8.0 2 August2 2018 China Vanke Co Ltd-H 02202 HK 269,710.2 23.350 6.4 5.2 4.7 1.4 1.2 1.1 5.5 23.3 3.1 Sunac China Holdings Ltd 01918 HK 99,279.8 22.550 6.6 4.0 3.0 1.7 1.2 0.9 3.3 23.5 7.2 Agile Group Holdings Ltd 03383 HK 44,497.7 11.360 5.3 4.2 3.5 0.9 0.8 0.7 8.7 17.3 3.1 Shimao Property Holdings Ltd 00813 HK 70,788.8 20.900 6.7 5.3 4.3 0.9 0.8 0.7 5.8 14.7 7.0 Guangzhou R&F Properties - H 02777 HK 43,824.2 13.600 3.8 3.0 2.5 0.6 0.5 0.4 10.5 15.4 6.3 Bbmg Corp-H 02009 HK 41,602.6 2.950 6.9 6.1 5.8 0.5 0.5 0.4 2.6 7.4 10.0 Sino-Ocean Group Holding Ltd 03377 HK 32,669.6 4.290 5.7 4.8 3.8 0.5 0.5 0.5 7.6 9.9 6.5 China Jinmao Holdings Group 00817 HK 39,851.3 3.450 6.9 5.3 3.8 0.9 0.8 0.7 5.9 13.0 9.8 Ronshine China Holdings Ltd 03301 HK 14,384.7 9.000 4.8 3.0 2.1 1.0 0.8 0.6 3.3 18.2 n.a. Zhenro Properties Group Ltd 06158 HK 18,965.8 4.600 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Kwg Property Holding Ltd 01813 HK 25,903.8 8.210 4.8 3.7 2.9 0.7 0.6 0.6 7.3 15.3 10.4 Yuexiu Property Co Ltd 00123 HK 17,733.9 1.430 6.2 5.0 4.2 0.4 0.4 0.4 6.4 7.4 8.6
Shenzhen Investment Ltd 00604 HK 22,161.2 2.750 7.3 6.2 6.4 0.5 0.5 ] 2 r 0.4a M t h 6.7g i R _ 7.1 e l b 6.3a T [
Yuexiu Real Estate Investmen 00405 HK 16,013.5 5.290 15.3 18.4 18.4 1.0 1.0 1.0 6.6 6.5 21.3 Yuzhou Properties Co 01628 HK 16,931.3 4.040 3.8 2.9 2.4 0.8 0.7 0.6 9.2 21.9 2.9 Greentown China Holdings 03900 HK 18,858.9 8.700 7.7 6.9 6.4 0.6 0.5 0.5 2.5 6.8 11.2 Powerlong Real Estate Holdin 01238 HK 16,229.1 4.060 3.8 3.0 2.5 0.5 0.4 0.4 7.2 15.6 n.a. Soho China Ltd 00410 HK 18,770.3 3.610 39.2 29.9 23.6 0.5 0.5 0.5 4.0 1.4 27.1 Median 6.4 5.1 4.2 0.9 0.8 0.6 5.8 15.4 6.7
Simple Average 8.0 6.6 5.7 0.9 0.8 0.7 6.0 15.2 8.5
Weighted Average 6.9 5.6 4.7 1.2 1.0 0.9 5.9 20.6 6.0
HK listed mid-small developers with major revenue from mainland China Overseas Grand Oceans 00081 HK 8,832.3 2.580 3.8 3.1 2.8 0.4 0.4 0.3 2.4 13.7 3.8
Poly Property Group Co Ltd 00119 HK 10,984.6 3.000 4.8 4.7 4.3 0.4 0.4 0.4 6.0 6.4 7.1 (03301 HK)
Shanghai Industrial Urban De 00563 HK 6,639.1 1.380 8.1 7.7 6.9 0.5 0.5 0.4 2.8 4.6 n.a. Modern Land China Co Ltd 01107 HK 3,585.0 1.290 4.9 3.4 3.0 0.6 0.5 0.5 4.5 14.6 n.a. China Aoyuan Property Group 03883 HK 13,944.2 5.200 5.1 3.7 2.8 1.0 0.8 0.7 6.6 22.0 6.0
C C Land Holdings Ltd 01224 HK 6,988.2 1.800 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. 融信中国 Fantasia Holdings Group Co 01777 HK 6,512.1 1.130 4.1 3.2 2.5 0.3 0.3 0.2 7.4 7.5 n.a. Hopson Development Holdings 00754 HK 14,332.6 6.440 10.2 10.1 n.a. n.a. n.a. n.a. 3.0 n.a. n.a. Central China Real Estate 00832 HK 9,313.6 3.410 6.6 4.6 4.2 0.8 0.7 0.7 4.1 13.3 4.3 China Sce Property Holdings 01966 HK 12,695.1 3.320 4.4 3.2 2.3 0.8 0.6 0.5 7.3 18.4 3.7
Top Spring International Hld 03688 HK 3,505.5 2.530 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Ronshine China Beijing Capital Land Ltd-H 02868 HK 9,750.0 3.220 n.a. n.a. n.a. n.a. n.a. n.a. 9.6 n.a. n.a. Zhong An Real Estate Ltd 00672 HK 2,382.3 0.410 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Beijing North Star Co Ltd-H 00588 HK 12,571.4 2.470 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. China South City Holdings 01668 HK 11,694.0 1.460 7.7 6.0 4.9 0.4 0.3 0.3 4.8 10.5 14.0 Shui On Land Ltd 00272 hk 14,270.1 1.770 8.4 7.8 6.4 0.3 0.3 0.3 4.2 3.0 9.7 Glorious Property Holdings 00845 HK 3,272.9 0.420 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Median 5.1 4.6 3.6 0.4 0.4 0.4 4.7 11.9 6.0
Simple Average 6.2 5.2 4.0 0.5 0.5 0.4 5.2 11.4 6.9
Weighted Average 6.5 5.5 4.1 0.6 0.5 0.4 5.3 11.7 7.1 Source: the Company, Guotai Junan International.
Report
Company
See the last page for disclaimer Page 18 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Financial Statements and Ratios
[Table_IncomeStatement] [Table_BalanceSheet] ] 1 r a M t h g i R _ e l b a T [
Income Statement Balance Sheet
Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F
11,372 30,341 58,741 81,154 98,033 Total Revenue PPE 1,321 1,518 1,732 1,965 2,219
- Sales of Properties 11,114 29,589 57,758 79,886 96,423 Investment Using Equity Method 2,696 6,744 6,990 7,253 7,533
- Other Income 258 753 983 1,268 1,610 Land Use Rights 480 464 450 436 422
Cost of Sales (9,070) (25,317) (45,523) (61,695) (73,665) Investment Property 4,058 10,465 12,612 14,951 17,545
Gross Profit 2,302 5,025 13,219 19,459 24,368 Other Non-current Assets 938 656 842 1,019 1,198 2 August2 2018 - Change in Fair Value of IPs 639 1,108 890 1,034 1,241 Total Non-current Assets 9,492 19,848 22,626 25,623 28,916
- SG&A (951) (1,695) (3,314) (4,624) (5,642) Cash & Cash Equivalents 11,526 18,473 27,239 28,648 31,642
- Other Gains, Net 12 46 60 83 70 Properties under Development 31,615 90,900 132,506 177,858 239,853 Operating Profit 2,001 4,484 10,854 15,952 20,037 Completed Properties 7,573 9,477 10,425 11,467 12,614 - Finance income/(costs), net 125 223 (18) 64 65 Restricted Cash 907 1,934 2,320 2,900 3,335
- Share of Profits 443 283 311 343 377 Trade and Other Receivables 32,103 23,720 31,908 40,997 47,754
Profit before Tax 2,570 4,990 11,148 16,359 20,479 Other Current Assets 5,692 5,845 6,246 6,588 6,643
Income Tax (867) (2,343) (4,997) (7,544) (9,605) Total Current Assets 89,415 150,349 210,644 268,458 341,842
Profit after Tax 1,703 2,646 6,151 8,815 10,874 Total Assets 98,907 170,196 233,269 294,081 370,758
Non-controlling Interest (411) (967) (2,374) (3,502) (4,395)
Shareholders' Profit / Loss 1,292 1,680 3,778 5,312 6,478 Advanced Proceeds Received 20,968 41,244 72,684 104,793 157,254
Adjusted Net Profit 971 1,307 3,476 4,976 6,086 Trade and Other Payables 10,947 21,595 34,697 42,231 44,170
] 2 r a M t h g i R _ e l b a T [ Basic EPS 0.964 1.223 2.363 3.324 4.053 Bank Borrowings 7,734 21,844 25,217 28,511 31,362
Underlying EPS (RMB) 0.724 0.949 2.175 3.114 3.808 Other Current Liabilities 3,005 4,101 4,858 5,508 5,661 Total Current Liabilities 42,654 88,784 137,456 181,042 238,448
[Table_CashFlowStatement] Cash Flow Statement Long-term Borrowings 31,684 47,610 55,073 64,016 73,736
Year end 31 Dec (RMB m) 2016A 2017A 2018F 2019F 2020F Deferred Income Tax Liabilities 1,480 3,041 3,954 4,745 4,982
Operating Activities Total Non-current Liabilities 33,163 50,651 59,027 68,761 78,718
Profit before Taxation 2,570 4,990 11,148 16,359 20,479 Total Liabilities 75,818 139,435 196,483 249,803 317,166
Interest Income (60) (85) (102) (118) (124) Total Shareholders' Equity 7,471 10,224 14,137 18,386 23,569 D&A 18 75 77 88 100
Others (1,154) (1,328) (1,120) (1,369) (1,610) Minority Interest 15,619 20,537 22,650 25,891 30,023
Changes in Working Capital: (17,561) (12,111) 521 (8,384) (6,938) Total Equity 23,089 30,761 36,787 44,277 53,592
Net Cash from Operations (16,188) (8,460) 10,525 6,577 11,907 (03301 HK)
[Table_FinancialRatio] Income Tax Paid (380) (1,035) (2,487) (3,672) (4,607) Financial Ratios
LAT Paid (593) (878) (1,452) (2,972) (4,862) 2016A 2017A 2018F 2019F 2020F
Cash from Operating Activities (17,161) (10,372) 6,586 (67) 2,439 Revenue Growth (%) 53.4 166.8 93.6 38.2 20.8 融信中国 Investing Activities Gross Profit Growth (%) -15.2 118.3 163.1 47.2 25.2
Additions to PPE and IPs (405) (4,716) (739) (790) (845) Reported Net Profit Growth (%) -9.8 30.0 124.9 40.6 21.9
Other Investing Cash Flow (7,440) (2,064) (114) (116) (128) Underlying Net Profit Growth (%) -32.2 34.6 166.1 43.2 22.3
Cash from Investing Activities (7,846) (6,780) (853) (906) (972)
Financing Activities Gross Margin (%) 20.2 16.6 22.5 24.0 24.9 Ronshine China Debt Raised/(Repaid) 21,811 25,802 10,576 11,976 12,308 Operating Profit Margin (%) 17.6 14.8 18.5 19.7 20.4 Interests Paid (1,750) (3,934) (6,356) (7,409) (8,388) Adjusted Net Margin (%) 8.5 4.3 5.9 6.1 6.2
Dividends Paid 0 0 (756) (1,062) (1,296) ROE (%) 22.0 19.0 31.0 32.7 30.9
Proceeds from Issuing Shares 1,505 1,020 890 0 0 ROCE (%) 4.9 3.6 6.3 8.1 8.5
Capital Injection from Non-controlling ROA (%) 2.5 2.0 3.0 3.3 3.3
Interests 8,468 1,891 0 0 0
Other Financing Cash Flow 3,689 (615) (1,354) (1,152) (1,123) Net Gearing Ratio 116.9 159.4 127.3 118.6 107.2
Cash from Financing Activities 33,724 24,165 3,001 2,352 1,502 Debt to Equity Ratio 170.7 225.8 207.7 189.8 172.5
Net Changes in Cash 8,718 7,013 8,733 1,379 2,968
Cash at Beg of Year 2,742 11,526 18,473 27,239 28,648 Underlying P/E (x) 11.1 7.7 3.4 2.3 1.9
Exchange Losses 65 (65) 33 29 27 P/E (Basic) (x) 8.4 6.0 3.1 2.2 1.8
Cash at End of Year 11,526 18,473 27,239 28,648 31,642 P/E (Diluted) (x) 8.4 6.0 3.1 2.2 1.8 P/B (x) 1.4 1.0 0.8 0.6 0.5
Dividend Yield (%) 0.0 0.0 6.5 9.1 11.1
Source: the Company, Guotai Junan International.
Report
Company
See the last page for disclaimer Page 19 of 20 [Table_PageHeader]Ronshine China (03301 HK)
Company[Table_CompanyRatingDefinition] Rating Definition
The Benchmark: Hong Kong Hang Seng Index ] 1 r a M t h g i R _ e l b a T [
Time Horizon: 6 to 18 months
Rating Definition Buy 买入 Relative Performance>15%; or the fundamental outlook of the company or sector is favorable. Accumulate 收集 Relative Performance is 5% to 15%; or the fundamental outlook of the company or sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; August2 2018 or the fundamental outlook of the company or sector is neutral. Reduce 减持 Relative Performance is -5% to -15%; or the fundamental outlook of the company or sector is unfavorable.
Sell 卖出 Relative Performance <-15%; or the fundamental outlook of the company or sector is unfavorable.
Sector[Table_ RatingIndustry DefinitionRatingDefinition] The Benchmark: Hong Kong Hang Seng Index Time Horizon: 6 to 18 months Rating Definition Outperform 跑赢大市 Relative Performance>5%;
] 2 r a M t h g i R _ e l b a T [ or the fundamental outlook of the sector is favorable. Neutral 中性 Relative Performance is -5% to 5%; or the fundamental outlook of the sector is neutral. Underperform 跑输大市 Relative Performance<-5%; Or the fundamental outlook of the sector is unfavorable.
[DISCLOSURETable_DISCLOSUREOFINTERESTS OF INTERESTS ] (1) The Analysts and their associates do not serve as an officer of the issuer mentioned in this Research Report. (2) The Analysts and their associates do not have any financial interests in relation to the issuer mentioned in this Research Report. (3) Except for KAISA GROUP (01638 HK),GUOTAI JUNAN I (01788 HK),BINHAI INVESTMENT (02886 HK),GFI MSCI A I (03156 HK),CAM SCSMALLCAP (03157 HK),ZHENRO PPT (06158 HK),MR CSI300 ETF-R (CNY) (83127 HK),GFI MSCI A I-R (CNY) (83156 HK),Guotai Junan and its group companies do not hold equal to or more than 1% of the market capitalization of the issuer mentioned in this Research
Report. (03301 HK) (4) Guotai Junan and its group companies have not had investment banking relationships with the issuer mentioned in this Research Report within the preceding 12 months. (5) Guotai Junan and its group companies are not making a market in the securities in respect of the issuer mentioned in this Research
Report. 融信中国 (6) Guotai Junan and its group companies have not employed an individual serving as an officer of the issuer mentioned in this Research Report. There is no officer of the issuer mentioned in this Research Report associated with Guotai Junan and its group companies.
Ronshine China DISCLAIMER
This Research Report does not constitute an invitation or offer to acquire, purchase or subscribe for securities by Guotai Junan Securities (Hong Kong) Limited ("Guotai Junan"). Guotai Junan and its group companies may do business that relates to companies covered in research reports, including investment banking, investment services, etc. (for example, the placing agent, lead manager, sponsor, underwriter or invest proprietarily).
Any opinions expressed in this report may differ or be contrary to opinions or investment strategies expressed orally or in written form by sales persons, dealers and other professional executives of Guotai Junan group of companies. Any opinions expressed in this report may differ or be contrary to opinions or investment decisions made by the asset management and investment banking groups of Guotai Junan.
Though best effort has been made to ensure the accuracy of the information and data contained in this Research Report, Guotai Junan does not guarantee the accuracy and completeness of the information and data herein. This Research Report may contain some forward-looking estimates and forecasts derived from the assumptions of the future political and economic conditions with inherently unpredictable and mutable situation, so uncertainty may contain. Investors should understand and comprehend the investment objectives and its related risks, and where necessary consult their own financial advisers prior to any investment decision.
This Research Report is not directed at, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in
any jurisdiction where such distribution, publication, availability or use would be contrary to applicable law or regulation or which would subject
Guotai Junan and its group companies to any registration or licensing requirement within such jurisdiction.
Report
© 2018 Guotai Junan Securities (Hong Kong) Limited. All Rights Reserved. 27/F., Low Block, Grand Millennium Plaza, 181 Queen’s Road Central, Hong Kong. Tel.: (852) 2509-9118 Fax: (852) 2509-7793
Website: www.gtja.com.hk
Company
See the last page for disclaimer Page 20 of 20