\u3000\u3000 China State Construction Engineering Corporation Limited(601668) (601668)
In December, the newly signed contracts were significantly accelerated, and the performance of housing construction was brilliant. From January to December 2021, the newly signed construction contracts of the company amounted to 3107.4 billion yuan, an increase of 12.1% at the same time, accelerating by 4 PCT compared with January to November; The newly signed contracts in December amounted to 466.1 billion yuan, a year-on-year increase of 42.7%, significantly accelerating 35.0 PCT compared with the single month in November, mainly driven by the housing construction business. In terms of business segments, the newly signed contract amount of housing construction from January to December was 2250.6 billion yuan, an increase of 8.3%, accelerating 5.6 PCT compared with the previous month. In December, the newly signed contract amount was 282 billion yuan, an increase of 78.5% year-on-year, accelerating 69.9 PCT compared with the previous month. The substantial increase in housing construction orders is mainly due to: 1) the good demand for urban renewal, old transformation, industrial parks and other types of projects, and the centralized implementation of some large projects. 2) Policy fine-tuning, the overall environment of the real estate industry has improved slightly. 3) It fell by 20% in the same period last year, with a low base. From January to December, the newly signed capital construction contracts amounted to 843.9 billion yuan, an increase of 24.1% over the same period, 4.6 PCT slower than that of the previous month; In December, 182 billion yuan was newly signed in a single month, a year-on-year increase of 9.3%, and continued to maintain steady growth. From January to December, the new construction area was 385 million square meters, with a year-on-year increase of 12.4%, accelerating by 2.9 PCT compared with that from January to November.
Real estate sales picked up in December, and the whole year ended smoothly. From January to December 2021, the contract sales of the company’s real estate business were RMB 422.1 billion, a year-on-year decrease of 1.5%, a decrease of 0.2 PCT compared with the previous month, of which the single month contract sales in December were RMB 58.5 billion, a year-on-year decrease of 0.5%, a decrease of 34.2% compared with November; From January to December, the contract sales area was 21.43 million square meters, a year-on-year decrease of 9.6%, 0.3 PCT narrowed compared with the previous month, of which the contract sales area in a single month in December was 3.14 million square meters, a year-on-year decrease of 7.9%.
The supply side reform of the real estate industry is accelerating, and the leading value of stable central enterprises is expected to be revalued. Under the strict supervision of the “three red lines”, a number of highly leveraged private real estate enterprises will face risks in 2021. It is expected that they will gradually withdraw from the market or slow down their expansion in the future, the supply side reform of the real estate industry will accelerate, and the market share is expected to further concentrate on the leaders of central enterprises and state-owned enterprises. China State Construction Engineering Corporation Limited(601668) CNOOC real estate has long adhered to the low leverage business strategy with stable financial indicators. At the same time, as the leader of central enterprises, the company has smooth financing channels and low cost. In the future, it is expected to obtain more high-quality land resources under compliance requirements, or acquire real estate enterprise projects with operational risks, accelerate industry integration, realize the continuous improvement of market share, and the value is expected to be revalued. We predict that CNOOC real estate is expected to contribute 20 billion yuan of profit attributable to the parent company in 2021, with reference to pe6.6 billion in Poly Developments And Holdings Group Co.Ltd(600048) 21 3x valuation, with a market value of 126 billion yuan; The profit contributed by construction business is 29.5 billion yuan, with reference to the average pe5.5 billion yuan in China Railway Group Limited(601390) , China Railway Construction Corporation Limited(601186) , China Communications Construction Company Limited(601800) 21 years 7x valuation, with a market value of 168.2 billion yuan; The total market value of the segment valuation is 294.2 billion yuan, 35% higher than the current market value.
The company has rich experience in affordable housing and strong competitiveness. It is expected to benefit from the acceleration of affordable housing construction. The central economic work conference in December last year changed from “attaching great importance” to “promoting” the construction of affordable housing in 2020, which may indicate that the construction of affordable housing has entered the implementation stage from the preparation stage, and the construction progress may be significantly accelerated in 2022. We believe that accelerating the construction of affordable housing can not only improve people’s livelihood, but also hedge the contraction of investment in private real estate enterprises and stabilize real estate investment. It is expected to become one of the important starting points for steady growth this year and is expected to be given priority to financial resources. As a leading central enterprise in real estate construction, the company has a strong competitive advantage in the affordable housing construction and investment operation market. According to the roadshow data on the company’s official website, the newly signed affordable housing orders in the first three quarters of 2021 are 82.8 billion yuan. The company has rich project experience and is expected to benefit from the acceleration of China’s affordable housing construction in the future.
Investment suggestion: it is predicted that the company’s net profit attributable to the parent company in 21-23 years will be 49.5/54.1/58.7 billion yuan respectively, with a year-on-year increase of 10% / 9% / 9%, EPS of 1.18/1.29/1.40 yuan respectively, the current share price corresponding to PE is 4.4/4.1/3.7 times and Pb (LF) is 0.69 times, which is at the lowest range in history and maintains the “buy” rating.
Risk tips: the credit risk impact of some real estate enterprises, the risk of real estate regulation, the risk that the project implementation progress does not meet expectations, and the risk of regulatory policy changes.
