股 票 研 [Table_Title] Van Liu 刘斐凡 Company Report: China Aoyuan (03883 HK) 究 (86755) 2397 6672 Equity Research 公司报告： 中国奥园 (03883 HK) [email protected] 5 September 2018 Business[Table_Summary Still] on the Uptrend, Maintain "Buy" 业务仍处于上升通道，维持“买入” 1H18 underlying net profit was in line with our expectation. The Rating:[Table_Rank ] Buy Company’s top line increased by 67.6% YoY to RMB13,667 mn in 1H18. Maintained 公 Underlying net profit increased 53.5% YoY to RMB1,045 mn. 司 评级： 买入 (维持) Contracted sales is likely to extend its uptrend. From Jan. to Aug. 2018, 报 the Company achieved RMB53.160 bn in contracted sales, up 144.9% YoY. 6[Table_Price-18m TP 目标价] : HK$8.08 告 Disciplined land replenishment initiatives with strong project Revised from 原目标价: HK$9.55 Company Report redevelopment capacity could constrain leverage expansion under the Share price 股价: HK$5.960 severe external environment. 53% of the Company's land banks were in tier-1/ tier-2/ international cities. Its unit land cost amounted to RMB2,036 per sq.m., representing 19.9% of ASP in 1H18. This could protect the Company’s Stock performance gross margin. 股价表现 Average funding costs will increase and profitability could slightly deteriorate through exchange losses. The Company should justify a higher NAV discount [Table_QuotePic] to factor in the severe external environment and declining land bank quality. Therefore, we revise down our target price from HK$9.55 to HK$8.08, representing a 49% discount to 2018E NAV of HK$15.72 per share, 8.0x 证 2018 underlying PER and 1.5x 2018 PBR. We maintain "Buy". Risk factors: 券 告 lower-than-expected contracted sales, possible failure in operations activities 研 报 of overseas projects and redevelopment projects. 究 究 2018 年上半年核心净利符合预期。2018 年上半年总收入同比增长 67.6%到人民币 13,667 报 百万元。核心净利同比上升 53.5%到人民币 1,045 百万元。 研 告 合约销售延续上升势头。2018 年 1-8 月，公司录得人民币 531.60 亿元的合约销售，同比 券 增长 144.9%。 Equity Research Report 证 节制的土储补充以及强大的项目更新能力能够在严厉的外部环境下限制杠杆扩展。公司 [Tab Change[Table_PriceChange] in Share Price 1 M 3 M 1 Y 53%的土储位于一线/ 二线/ 国际城市。且其单位地价为人民币 2,036 元每平米，相当于 股价变动 1 个月 3 个月 1 年 le_I 2018 年上半年销售均价的 19.9%。这将保障公司的毛利率。 Abs. % nfo1 绝对变动 % 16.9 (11.7) 73.8 平均融资成本将会上升并且盈利能力将会被汇兑损益轻微损害。考虑到严厉的外部环境和 Rel. % to HS Index 15.8 (1.7) 72.9 下降的土储质量，公司应适用更高的每股净资产折让。因此，我们将我们的目标价从 9.55 相对恒指变动 % ] Avg. Share price(HK$) 房 港元下调至 8.08 港元，相当于较 15.72 港元的 2018 年每股净资产有 49%的折让，也分别 平均股价（港元） 6.6 6.0 3.9 地 相当于 8.0 倍 2018 年核心市盈率和 1.5 倍 2018 年市净率。我们维持“买入”。风险：低于 Source: Bloomberg, Guotai Junan International. 预期的合约销售，海外项目和旧改项目可能的运营失败。 产 行 业 Property Sector [Table_ Year End Turnover Net Profit EPS EPS PER BPS PBR DPS Yield ROE [Tab 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) (%) (%) le_I 2016A 11,827 881 0.323 10.6 16.5 3.270 1.6 0.150 2.8 10.3 nfo2 2017A 19,115 1,640 0.613 89.8 8.1 3.795 1.3 0.250 5.0 17.2 中] 2018F 29,461 2,340 0.873 42.4 5.9 4.590 1.1 0.262 5.1 20.8 中外 2019F 39,873 3,159 1.178 34.9 4.4 5.705 0.9 0.357 7.0 22.9 2020F 48,768 3,681 1.373 16.6 3.7 7.060 0.7 0.429 8.4 21.5 国运 奥 [Table_BaseData]Shares in issue (m) 总股数 (m) 2,682.0 Major shareholder 大股东 Asia Square Holdings Ltd. 54.1% 输 园 Market cap. (HK$ m) 市值 (HK$ m) 15,982.2 Free float (%) 自由流通比率(%) 45.9 3 month average vol. 3 个月平均成交股数(‘000) 11,298.4 FY18 Net gearing (%) FY18 净负债/股东资金 (%) 49.7 52 Weeks high/low (HK$) 52 周高/低 (HK$) 7.900 / 3.380 FY18 Est. NAV (HK$) FY18 每股估值（港元） 15.7 Source: the Company, Guotai Junan International. China Aoyuan (03883 HK) China Aoyuan (03883 See the last page for disclaimer Page 1 of 9 [Table_PageHeader]China Aoyuan (03883 HK) Housing sales growth rebounded. During Jan.-Jul. 2018, the YoY increase in commodity house sales expanded compared to that during Jan.-Jun. 2018. The YoY increase in investment increased slightly by 0.5 ppts.] Moreover,1 r a M t landh areag i soldR _ increasede l b a T [ 11.3% YoY during Jan.-Jul. 2018. Sources of funds for real estate development enterprises recorded YoY rebound. With the slight loosening of the credit environment, we expect steady investment. Housing sales amount remained high in absolute terms. In addition, saleable areas extended downside momentum. Subsequently, we argue steady fundamentals for the property 2018 market. Figure 1: Cumulative House Sales Amount in China Figure 2: Cumulative House Sales GFA in China 5 September 16,000 70.0% 1,800 50.0% 60.0% 14,000 1,600 40.0% 50.0% 12,000 1,400 30.0% 40.0% 1,200 10,000 30.0% 20.0% 1,000 8,000 20.0% 10.0% 10.0% 800 6,000 0.0% 0.0% 600 4,000 -10.0% -10.0% 400 2,000 -20.0% 200 -20.0% 0 -30.0% 0 -30.0% 15 16 14 17 15 16 17 18 15 17 18 16 15 17 18 16 14 15 15 16 17 17 16 15 17 16 18 15 16 17 15 17 18 16 15 17 18 16 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Jul Jul Jul Jul Jan Jan Jan Jan Mar Mar Mar Mar Sep Nov Sep Nov Sep Nov Nov Feb Feb Feb Feb Aug Aug Aug May May May May Nov Nov Nov Nov May May May May Amount Sold of Commodity Houses (LHS)(RMB bn) GFA Sold of Commodity Houses (LHS)(sq.m. mn) Amount Sold of Residential Houses (LHS) (RMB bn) GFA Sold of Residential Houses (LHS) (sq.m. mn) ] 2 r a M t h g i R _ e l b a T [ Amount Sold YTD YoY of Commodity Houses (RHS) GFA Sold of Commodity Houses (RHS) Amount Sold YTD YoY of Residential 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. Severe external environment will be maintained but policy should be moderately loose if the macro economy starts to deteriorate due to the Sino-US trade war. There should be no trigger for policy changes due to stable ASP, proper stock turnover and decreasing land auction premium. Tightening policies will be extended. Despite recent marginal loosening, the credit environment will follow a tightening trend in the long run. 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. We think that commodity housing sales will only experience limited decline. Urbanization, demand from housing (03883 HK) replacement and monetization of squatter settlement rebuilding will lead to sustainable housing demand in 2018-2020. Moreover, if the property market starts to slump, the policy and credit environment related to the property sector should ease again to 中国奥园 stabilize the property market as per the last round of policy easing which started on 30 Sep. 2014. Figure 3: Key Property Development and Sales Data 30.0% China Aoyuan 20.0% 10.5% 7.7% 13.5% 8.1% 22.5% 15.8% 8.8% 6.5% 10.0% 19.8% 7.0% 8.9% 0.0% 2.0% 17.3% 1.0% 7.5% 0.0% 2013 2014 2015 2016 2017 2018F -10.0% -10.7% -2.0% -14.0% -7.6% -14.0% -20.0% -7.0% -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. China Aoyuan’s (the "Company") 1H18 underlying net profit was in line with our expectation. The Company’s top line soared by 67.6% YoY to RMB13,667 mn in 1H18 due to strong contracted sales growth and more GFA delivered. Gross profit Report amounted to RMB3,902 mn, up 78.1% YoY. With exchange loss of RMB168 mn, net profit increased 62.1% YoY to RMB1,216 mn, which was in line with our expectation. If excluding fair value gains on investment properties and exchange loss, underlying net profit increased 53.5% YoY to RMB1,045 mn, in line with our expectation. GPM increased 1.7 ppts YoY to 28.6%. Net profit Company margin decreased 0.3 ppts YoY to 8.9%. Net gearing ratio declined 9.2 ppts comparing with the end of 2017. See the last page for disclaimer Page 2 of 9 [Table_PageHeader]China Aoyuan (03883 HK) Table 1: Comparison of the Company’s Balance Sheet and Income Statement in 1H17 and 1H18 ] 1 r a M t h g i R _ e l b a T [ RMB mn 1H17 1H18 Change Total revenue 8,154 13,667 67.6% Gross profit 2,191 3,902 78.1% GPM 26.9% 28.6% 1.7 ppts 2018 NP (Inc. after-tax fair value gains on IP and exchange losses) 750 1,216 62.1% NP (Ex.