\u3000\u3000 China Vanke Co.Ltd(000002) China Vanke Co.Ltd(000002) )
Company overview. 1) Historical evolution. The company was founded in 1984 and entered the real estate industry after the completion of the joint-stock reform in 1988. It was listed on the Shenzhen Stock Exchange in 1991 and established its main business of residential development in 1993. The development process of the company can be divided into four stages. ① Comprehensive operation stage (19841992). At the beginning of its establishment, the company was mainly engaged in the sales of office automation and other equipment. It first invested in real estate projects in 1988. In 1990, it formed four business directions: Commerce, industry, real estate and cultural communication. It was listed on the Shenzhen Stock Exchange in 1991. ② Stage of specialization strategy (19932001). In 1993, the company turned to the specialization development direction with real estate as the core, established urban housing development as the leading business, and completed the specialization strategy adjustment in 2001. ③ National layout stage (2 Jiangsu Jiuding New Material Co.Ltd(002201) 3). In 2003, the company actively distributed the Yangtze River Delta, Pearl River Delta and Northeast China, and successfully entered the markets of Zhejiang and Suzhou in 2005. In 2013, the company invested in overseas real estate projects for the first time. ④ Diversified layout stage (since 2014). In 2014, the company proposed to transform from a developer to an urban service provider and was listed on the stock exchange in the same year. In 2016, independent logistics brands and youth long-term rental apartments were launched. In 2017, Shenzhen Metro Group became the cornerstone shareholder and jointly promoted the “track + property” strategy. In 2020, the company’s full caliber sales exceeded 700 billion. 2) Corporate governance. By the end of December 2021, Shenzhen Metro Group, the major shareholder of the company, holds 27.89% of the shares of the company. The management structure is group headquarters + business groups + business units. The headquarters has 8 business groups and 7 business units. 3) Business overview. The largest source of revenue of the company is the real estate development business, accounting for more than 95% of the operating revenue for a long time. Property management services were the second largest source of revenue in 2024, accounting for 1.4%. The revenue of the property management sector increased well, with a year-on-year increase of 32.1% in 2021.
Business and financial analysis. (1) Asset side. ① In terms of soil storage quality, the company’s stock of soil storage in 2021 is concentrated in second tier cities, with heavy warehouses in the Yangtze River Delta and Pearl River Delta, and key cities include Changchun, Chengdu, Xi’an, etc; The turnover of the company is fast, and the average project development cycle is 2.1 years, which is lower than the median of the sample real estate enterprises. ② In terms of investment rhythm, the company acquired land at a faster pace in 2012. In 2014, due to the shrinking land market in major cities and rising prices, the company’s land acquisition intensity fell. From 2015 to 2017, the company’s land acquisition intensity continued to rise while the contract sales increased rapidly. Since 2018, with the continuous tightening of macro policies, the upgrading of regulation and control in major cities and the obvious cooling of the land market, the pace of land acquisition by the company has slowed down significantly. In 2021, the company adhered to the investment strategy of living within its means, and the intensity of land acquisition has decreased to 31.3%. ③ In terms of sales, the company’s contract sales maintained a rapid growth, climbed to 200 billion in 2014 and exceeded 500 billion in 2017. Since 2018, the sales growth has slowed down, but it is still at a high level, and the sales exceeded 700 billion in 2020. In 2021, the contract sales fell to 627.78 billion, which was basically the same as the negative growth performance of the top 20 real estate enterprises in the same period. ④ In terms of settlement capacity, benefiting from the rapid growth of sales, the growth rate of operating revenue of the company’s real estate sector has maintained a high level in recent years, with an increase of 7.4% in 2021. At the end of 2021, the company’s contract liabilities reached 638.22 billion, an increase of 1.04% at the same time. There is a certain guarantee for future settlement. Affected by the high land acquisition price in the early stage, the gross profit margin of the real estate sector has declined since 2020. (2) Debt side stability. 1) Debt structure: the company’s financing channels are mainly bank loans, and the mortgage pledge rate of interest bearing liabilities is low. The proportion of short-term debt has continued to decline since 2020, and the proportion of short-term debt in 2021 was only 22%, a year-on-year decrease of 10.1pct. 2) Solvency: in recent years, the company’s cash short debt ratio has always been maintained at about 2 times. In 2021, due to the significant reduction of short-term interest bearing debt, the cash short debt ratio increased to 2.4 times; The net debt ratio has remained at a low level below 35% for a long time, and was 29.7% at the end of 2021; The pre estimated asset liability ratio decreased to 69.8%, and the company’s financial structure was optimized to the green level. 3) Financing capacity: since 2022, the company’s financing has been smooth, with a cumulative bond issuance of 9.99 billion from January to March. Compared with the second half of 2021, the bond issuance duration of the company has been slightly longer, and the average bond issuance cost has decreased by 34bp to 3.2%.
Real estate development: (1) profit forecast. According to the new construction and completion targets disclosed by the company and the relatively stable pace of land acquisition in recent years, assuming that the growth rate of the company’s carry over area from 2022 to 2024 is 3% / 6% / 6%, it is predicted that the growth rate of the company’s operating revenue in the real estate development sector from 2022 to 2024 will be 8% / 8% / 9%; (2) Property services. Combined with the past revenue growth and gross profit margin, it is predicted that the growth rate of operating revenue will remain 30% and the gross profit margin will remain about 17% from 2022 to 2024; (3) Other business sections. Combined with the relatively stable revenue of this section in the past, it is predicted that the growth rate of operating revenue from 2022 to 2024 will be 15% / 10% / 10%. Overall, it is predicted that the operating revenue of the company from 2022 to 2024 will be 4943 / 5417 / 599.8 billion yuan, the net profit will be 413 / 449 / 491 billion yuan and the EPS will be 2.10/2.28/2.50 yuan respectively. For the first time, it is rated as “overweight-a”, with a six-month target price of 24.0 yuan / share.
Risk tips: real estate regulation exceeded expectations, data processing deviation, real estate industry fell beyond expectations, settlement area was weaker than expected, etc
