\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 155 Seazen Holdings Co.Ltd(601155) )
Matters:
The company released its annual report for 2021, with annual revenue of 168.23 billion yuan, a year-on-year increase of 15.6%; The net profit attributable to the parent company was 12.6 billion, a year-on-year decrease of 17.4%. In 2021, the company plans not to distribute cash dividends, bonus shares or increase share capital with accumulation fund.
Ping An View:
The performance is in line with expectations, and the sales slowdown may affect the subsequent carry forward. In 2021, the company’s revenue increased by 15.6% year-on-year and the net profit attributable to the parent decreased by 17.4%, mainly due to: 1) affected by the increase of price limit and land price, the gross profit margin during the period decreased by 3.1pct to 20.4% year-on-year, including the gross profit margin of real estate development and sales business decreased by 4.1pct to 17.7%; 2) Net investment income decreased by 26.2% year-on-year to 2.27 billion yuan; 3) Under the background of downward pressure on the property market, the company accrued asset impairment of 4.84 billion yuan based on the principle of prudence, with a year-on-year increase of 3.24 billion yuan. During the period, the company’s operation and control improved, and the proportion of three fees decreased by 0.6pct to 6.6% year-on-year. Considering the slowdown of the company’s sales growth in the past two years and the reduction of the completion plan in 2022, it may have a certain impact on the subsequent carry forward.
Sales adhere to regional deep cultivation, and the new construction plan shrinks. During the period, the company adhered to the “residential + commercial” two wheel drive operation mode, with Shanghai as the center and the Yangtze River Delta as the core, and distributed 135 large and medium-sized cities in China. In 2021, the company’s sales amount was 233.78 billion yuan and the sales area was 23.547 million square meters, with a year-on-year decrease of 6.8% and an increase of 0.3% respectively. According to Kerui’s statistics, the company ranked 16th in the industry in terms of sales volume and 13th in terms of sales area in 2021. The company resolutely implements the regional deep ploughing standard of “mature with a market share of more than 10%, deep with a market share of more than 20% and thorough with a market share of more than 30%, and ranks among the top three provinces (municipalities directly under the central government) in Jiangsu and Tianjin. In 2022, the company plans to start a new construction of 15.021 million square meters and complete 28.017 million square meters, with a year-on-year decrease of 52.6% and 14.9% respectively. Considering the shrinking land acquisition since 2021h2 and the decline of construction plan in 2022, it may have a certain impact on the company’s marketable value in 2022.
Investment tends to be cautious and the layout of soil storage is relatively balanced. Under the pressure of the real estate market, the company insisted on prudent investment and both severity. In 2021h2, the company reduced the intensity of land acquisition. In the whole year, the land storage and construction area increased by 21.577 million square meters, with a total amount of about 76.71 billion yuan. The land acquisition sales area ratio and land acquisition sales amount ratio decreased to 91.6% and 32.8% respectively. The average floor price increased by 17.3% year-on-year to 3555 yuan / square meter, of which 10.286 million square meters were newly added for commercial complex projects. At present, the company has a total land reserve of 138 million square meters, which can meet the needs of development and operation in the next 2-3 years, and is mainly distributed in the areas with the most economic vitality and the highest population density. Among them, the first and second tier cities account for about 37% of the total land reserve, and the third and fourth tier cities in the Yangtze River Delta account for about 30% of the total land reserve.
The development of commercial real estate is bright, and the territory of “100 cities and 100 stores” continues to expand. In 2021, the company acquired 32 new Wyatt squares, and added 30 new Wyatt squares and entrusted management projects in operation (including 4 entrusted management projects in operation). By the end of the period, the company had 188 Wuyue squares in 135 cities across the country, with 130 in operation and entrusted management, ranking in the forefront of the industry. At the end of the period, the opening area of Wuyue Plaza reached 124838 million square meters, with an average rental rate of 97.63%. The territory of “100 cities and 100 stores” is constantly extending new boundaries. The company’s property rental and management realized a revenue of 7.969 billion yuan, a year-on-year increase of 46.6%; In 2022, it is planned to realize a total commercial income of 10.5 billion yuan, newly opened Wuyue Plaza and 25 entrusted projects in operation.
It has successfully reached the “green” level and debt financing is smooth. During the period, the company successively completed the issuance of corporate bonds and accounts receivable asset-backed securities, raising 1.785 billion yuan; Issuing medium-term notes in the inter-bank market and raising 800 million yuan; US $704 million in bonds issued overseas. Through direct financing, the company ensures the continuous and stable operation and responds to the call of the state to reduce leverage and stabilize expectations. During the period, the company successfully issued the first green dollar bond (with a scale of US $300 million, a term of 4.25 years and an interest rate of 4.625%), marking a key step in green finance. At the end of the period, the overall average financing cost of the company was 6.57%, lower than 6.72% at the end of 2020, falling for two consecutive years. At the end of the period, the company’s asset liability ratio excluding advances received was 69.95%, the net debt ratio was 48.12%, the cash short debt ratio was 1.07, and the three red lines met the requirements of “green file”.
Investment suggestion: considering that the decline of gross profit margin and impairment provision exceed the previous expectations, combined with the recent industry adjustment and the contraction of land acquisition, the company lowered the profit forecast of the company. It is estimated that the EPS in 20222023 will be 5.59 yuan and 5.65 yuan respectively (the original forecast is 9.36 yuan and 10.58 yuan), and the new forecast in 2024 will be 5.68 yuan. The corresponding PE of the current stock price is 5.5 times, 5.4 times and 5.4 times respectively. The company has stable debt, smooth financing, excellent development and operation strength, and commercial real estate is also in the forefront of the industry. Driven by two wheels, we are optimistic about the future development of the company and maintain the “recommended” rating.
Risk tips: 1) there is great downward pressure on the property market recently. If the follow-up policy improvement is less than expected, it may affect the future scale growth of the company and bring the risk of project impairment. 2) Due to the rise of land price and sales price limit, the company’s gross profit margin will still face the risk of decline in the future; 3) Under the background of frequent credit events of individual real estate enterprises, if the financing environment of subsequent industries does not ease significantly, the company’s capital situation may face pressure.
