\u3000\u3000 Hangzhou Binjiang Real Estate Group Co.Ltd(002244) (002244)
Ping An View:
Hangzhou deep ploughing real estate enterprise, with steady growth in operating performance: Hangzhou Binjiang Real Estate Group Co.Ltd(002244) is the local leading real estate enterprise in Hangzhou. The revenue and net profit attributable to parent company in 2021q1-3 increased by 89.4% and 49.1% year-on-year respectively, and the CAGR in 2017-2020 was 27.6% and 10.8% respectively. In terms of strategic play and regional layout, promote the “1 + 5” strategy with real estate as the main industry and property services as the auxiliary industry; Taking “three provinces and one city” (Zhejiang Province, Jiangsu Province, Guangdong Province and Shanghai city) as an important place for development, the company realized the simplified and efficient management and high turnover efficiency of “small radius”. At the end of 2021q3, the company’s expense rate (6.2%) was significantly lower than the average value of “ten thousand funds for bidding insurance” (7.8%) and the average value of A-share listed real estate enterprises (9.5%), and the value of human capital ranked among the top three in Kerui’s list in 2020. In addition, the management is deeply bound with the interests of the company. The chairman and actual controller holds more than 57% of the company’s shares and increased their holdings for many times in 2021, demonstrating their confidence in the development of the company.
In 2021, sales rose in double digits against the trend, and the regional property market was better: after 2021h2, the sales of real estate enterprises continued to be under pressure, and most leading real estate enterprises failed to achieve the annual target. Under the pressure of sales in the whole industry, the company bucked the trend to achieve sales growth of 24% and target completion of 112.8% in 2021. Both indicators are ahead of peers. We believe that it is mainly due to the better property market in Hangzhou and its leading position in the local market: in 2021, the sales supply ratio of commercial housing in Hangzhou was 123%, and the “short supply” in the market promoted the simultaneous rise of trading volume and price, and the overall decontamination cycle was only 2.6 months; In recent years, the company has been firmly in the leading position in the Hangzhou market. In 2021, the sales market in Hangzhou accounted for about 14.4%, and has formed a strong brand appeal. The development projects enjoy a high premium in the second-hand housing market and drive the hot sales of new houses. In the future, the property market in Hangzhou has the support of population and industry, the value of goods for sale in Binjiang Hangzhou is abundant, and the subsequent de commercialization of sales still has a reliable guarantee.
The financing cost is comparable to that of central state-owned enterprises, and the strength of land acquisition is highlighted in the downward period of the industry: the company has reduced the leverage level since 2017, and the “three red lines” have reached the standard. The comprehensive financing cost has decreased from 6% in 2017 to 4.9% in 2021, a record low, and the financing cost is on a par with that of central state-owned enterprises. In terms of financing structure, 7 became a low-cost bank loan, and the proportion of financing with a maturity of more than one year further increased; Recently, credit risk events of real estate enterprises have occurred frequently. Binjiang is one of the few high-quality private enterprises that successfully issued bonds in China after 2021h2. Under the background of tightening the financing end of the industry, its advantages have been further expanded. Relying on the above advantages, the company invested and expanded steadily, and “stored grain” against the trend in the downturn of the local market. About 62.5% of the new land storage and construction areas in 2021 were obtained in the second half of the year. For example, the company actively obtained 4 high-quality plots during the third centralized land supply window in Hangzhou, and the profit space of a single plot was significantly restored compared with the first two batches.
Profit forecast and investment rating: the company is rooted in advantageous areas. Under the downturn and differentiation trend of the real estate market, the subsequent sales deconvolution has a reliable guarantee; At the same time, the company adheres to steady operation and fine management, has a good financial condition, is immune from frequent credit risk events in the industry, demonstrates its financing advantages and expansion strength against the trend, and is a leader of high-quality private enterprises. We believe that with the continuous adjustment of the industry and the withdrawal of some real estate enterprises, the company is expected to gradually expand its advantages in the “adverse market” by virtue of its steady operation, brand and financing advantages. It is estimated that the company’s net profit attributable to the parent company from 2021 to 2023 will be 2.67 billion, 3.24 billion and 3.77 billion respectively, with corresponding EPS of 0.86 yuan, 1.04 yuan and 1.21 yuan respectively. The current share price corresponds to PE of 7.6 times, 6.3 times and 5.4 times respectively. It will be rated as “recommended” for the first time.
Risk tips: 1) there is a risk of decline in the company’s gross profit margin: if the subsequent property market in Hangzhou is hot, or the land price is high and the price of new houses is strictly limited, the company’s land acquisition and settlement gross profit margin may be under pressure; 2) The risk that the land acquisition is not as strong as expected: if the follow-up land auction rules are adjusted or the local market fluctuates, the company’s expansion of land storage may be blocked, which will also restrict the growth of sales scale in the future; 3) The policy improvement is not as expected: affected by the credit events of real estate enterprises, the expectation of sales deregulation of cooperative development projects or the credit qualification of partners, if subsequent partners have credit risk events, it will also hinder the company’s sales deregulation.
