\u3000\u3000 Hangzhou Binjiang Real Estate Group Co.Ltd(002244) (002244)
Core view: we believe that under the background of declining industry profit margin and strict supervision of pre-sale funds, deep cultivation in Zhejiang has consolidated the company’s competitive advantage in two aspects. On the one hand, the characteristics of small radius management make the company’s personnel streamlined and efficient, and the management and sales rates have been low in the industry for a long time. Under the steady operation, the comprehensive financing cost has decreased year by year. On the other hand, the strong demand for housing in Zhejiang Province, especially in Hangzhou, superimposes the reputation advantages accumulated by the company, so that the company can smoothly realize sales collection.
Company profile: Zhejiang regional leader, product system standardization
Hangzhou Binjiang Real Estate Group Co.Ltd(002244) was established in 1992 and listed in Shenzhen in May 2008. In 2020, the company’s sales will rank first in Zhejiang Province and Hangzhou, with obvious advantages of regional deep cultivation.
Land acquisition: seize the opportunity to expand soil storage, with strong cost control
The third round of centralized land supply in 2018, the second half of 2019 and 2021 is the window period of land acquisition in Hangzhou, Hangzhou Binjiang Real Estate Group Co.Ltd(002244) seize the opportunity to increase the scale of land acquisition from 2018 to 2020 and increase the proportion of land acquisition area in Hangzhou from 39.2% to 74.6%. In the third round of land supply, the company also won 4 parcels of land, with a total construction area of 347600 m2.
Cost advantage and steady operation are the key for the company to win land against the trend. Due to the advantages of personnel simplification and efficiency brought by deep cultivation in Hangzhou with a small radius, the company’s management rate has always been maintained below 1%, and the sales rate has always been lower than the industry average. The company’s comprehensive financing cost decreased from 5.8% in 2018 to 4.9% in 2021h1.
Sales: the sales amount increases, the quality is good, and the premium rate is high
The company’s sales grew steadily. The sales from 2019 to 2021 were 112.06 billion (YoY + 31.8%), 136.36 billion (YoY + 21.7%) and 169.13 billion (YoY + 24.0%) respectively. The completion of the annual sales target in 2021 was 112.8%. The company’s products are highly recognized. First, the proportion of projects under subscribed by the company has remained below 10% for a long time, and the winning rate is low; Second, the company’s first-hand houses and second-hand houses all reflect a certain brand premium strength.
Business situation: fast turnover, blossom and bear fruit, and roe boom is upward
Since 2018, the company’s turnover has accelerated, and the time from land acquisition to pre-sale has been reduced from 10.3 months to 7.8 months in 2020. After going through two stages of land acquisition and sales acceleration, the company’s roe will rise in 2021. In addition, due to the decline in the overall profit margin of the industry, the company actively increased the proportion of project equity to ensure profits. From 2017 to 2021, the proportion of company equity increased from 42.28% to 51.56%.
Profit forecast and investment suggestions
We expect that the company will realize operating revenue of 50.08 billion, 59.35 billion and 72.33 billion from 2021 to 2023, with a year-on-year increase of 75.1%, 18.5% and 21.9%; The net profit attributable to the parent company was 3.78 billion, 4.48 billion and 4.94 billion, with a year-on-year increase of 62.5%, 18.5% and 10.2%; Diluted earnings per share are 1.22, 1.44 and 1.59, corresponding to PE of 4.5 times, 3.8 times and 3.5 times.
The current share price of the company corresponds to 4.5 times the performance in 2021. Compared with comparable real estate enterprises, the valuation has certain advantages. In view of the fact that the company is in the process of continuous improvement of fundamentals, roe rebounded and superimposed performance continued to release, and the “buy” rating was given for the first time.
Risk tips: the tightening of financing environment exceeds expectations, the tightening of real estate regulation policies exceeds expectations, the double centralized transfer rules are further changed, and the quoted data lags behind or is not timely.
