\u3000\u30 Shenzhen Guohua Network Security Technology Co.Ltd(000004) 02 Financial Street Holdings Co.Ltd(000402) )
Real estate development focuses on the core urban agglomeration, with abundant soil reserves to support the future carry forward: in 21 years, the company achieved a sales amount of 33.9 billion yuan, a year-on-year increase of – 15.7%, and a sales area of 1.75 million square meters, a year-on-year increase of + 1.3%. Under the downward pressure of the industry, price for volume measures were taken to promote the decontamination and payment collection of the project, and the payment collection rate increased by 30% year-on-year. From a subregional perspective, the company’s strategy of deep cultivation of urban agglomeration has achieved remarkable results, of which Beijing Tianjin Hebei and the Yangtze River Delta contribute about 61%. Since 2019, the company has maintained a relatively cautious land acquisition strategy, with land acquisition shrinking year by year, and insisted on investing limited resources in valuable areas. Land acquisition in first and second tier cities accounted for more than 90% from 2019 to 2020. The total soil storage of the company in 21 years is 16.51 million square meters, which is slightly lower than that in 20 years, but it can still cover the sales demand in the next 3-5 years. In addition, the company focuses on five urban agglomerations, of which the first and second tier cities account for 88%. We believe that the quality of soil storage is the key indicator to determine the medium-term sales collection of real estate enterprises. At present, when the industry enters the era of structural growth, the company’s soil storage focuses on high-energy cities and core urban agglomerations, which is conducive to the company to take the lead in grasping the opportunity of market demand recovery, and the fundamentals are expected to be more flexible.
The core assets in the core area are non replicable: the company was born due to the construction of Beijing Financial Street Holdings Co.Ltd(000402) and sits on the high-quality holding assets in the core area of the core city with its unique resources and strong comprehensive development and operation ability. In the past 21 years, the management area of assets held by the company reached 1.318 million square meters, and the average book balance of investment real estate in recent five years was about 38 billion yuan. Most of the properties held by the company are located in the core location of high-level cities such as Beijing, Shanghai, Tianjin, Chongqing and Wuhan, and the scarcity attribute of assets is becoming increasingly prominent. The company has the largest number of holding assets in its base camp Beijing, accounting for 46% of the rentable area in 21 years, and they are all located in Financial Street Holdings Co.Ltd(000402) sector of Xicheng District. The sector supply is scarce, the tenants have strong rental capacity, and the rent and vacancy rate are outstanding. In addition, the company actively disposes of inefficient assets, continuously optimizes the holding structure, recovers cash and optimizes the asset liability structure. At the same time, it is conducive to the follow-up operation to focus more on the core assets of high-quality locations and further consolidate and strengthen the competitiveness of the company in the core areas.
Why focus on core assets? We believe that core assets tend to show strong anti cyclical in the economic downturn cycle. During the 2008 financial crisis, both Mitsui real estate in Japan and the properties held by Hong Kong lingzhan real estate fund achieved stable income growth, showing excellent ability to cross the cycle. In addition, at present, the central government adopts wide currency + wide credit to hedge the downward pressure of the economy. The downward interest rate is conducive to the revaluation of the value of the company’s core assets, which will play a positive role in driving the company’s performance.
Investment suggestion: We revalue the company’s assets in the form of Nav. The company’s real estate business can settle 16.51 million square meters in 2021, and use the capitalization rate to value its own core commercial office assets, with RNAV of 25.18 yuan per share. We predict that the company’s EPS will be 0.56 yuan in 2022, corresponding to 13 times of PE and 0.56 times of Pb in 22 years. We choose the same local state-owned enterprises and companies with high held assets as comparable companies. At present, the average Pb of comparable companies in 2022 is 0.87 times. At present, the Pb of the company is lower than that of comparable companies, and the valuation highlights the configuration cost performance. Considering that the background of the company’s state-owned shareholders can bring the company financing convenience, abundant land reserves, focus on the core first and second tier cities, and the held assets are located in the core area of high-energy cities, and the assets are non replicable, we believe that the valuation of the company should enjoy a certain premium. We gave the company a Pb valuation of 1 times in 2022, corresponding to the target price of 12.98 yuan, maintaining the “buy rating”.
Risk tip: the relaxation degree and speed of regulatory policies are lower than expected, the aggravation of the epidemic affects the operation of the company’s held properties, and the settlement progress is lower than expected.
