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摩根大通 2010 万科深度研究报告.pdf

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1、Asia Pacific Equity Research 11 August 2010 China Vanke Company Overweight 200002.SZ, 200002 CH FY10 interim review: Raising earnings and PT on strong sales Price: HK$9.74 Price Target: HK$12.00 Previous: HK$10.00 China Property Raymond Ngai, CFAAC (852) 2800-8527 J.P. Morgan Securities (Asia Pacif

2、ic) Limited 6912HK$Aug-09 Nov-09 Feb-10 May-10 Aug-10Price Performance200002.SZ share price (HK$SHEN.B (rebased)YTD 1m 3m 12mAbs 0.1% 10.7% 42.4% -7.5%Rel -5.9% -1.0% 23.7% -30.3%See page 13 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does a

3、nd seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment deci

4、sion. FY10E FY11E Old EPS (Rmb) 0.67 0.68 New EPS (Rmb) 0.67 0.80 % Chg 0% 18% IBES (Rmb) 0.60 0.67 Old NAV 8.21 New NAV 10.09 % Chg 23% Source: J.P. Morgan estimates Interim results were not great: Vanke posted only a 12% rise in interim core net profit to Rmb2.56 billion. This was because only 25%

5、 of FY10 completion projects were completed in 1H10 for profit booking, with 75% to be recognized in 2H10. 2H profit should grow significantly. The profit growth in 1H was driven by margin improvement to 29% from 24% with recognized sales areas down 40% Y/Y to 1.5 million sqm. Management is upbeat o

6、n contracted sales: Management maintains its forecast of 8.55 million sqm new construction starts and 5.04 million sqm completion this year in view of its strong contracted sales of Rmb45 billion in 7M10 (over Rmb8.0 billion sales achieved a month in June and July). With more new launches by end of

7、the year, it looks like full-year contracted sales will reach a record high of Rmb80 billion, up 26% Y/Y. Thus far, ASP achieved was high at Rmb11,400/sqm. Earnings estimate upgrade for FY11 due to strong sales: We revise our FY11 net profit estimate by 18% to Rmb8.8 billion on strong contracted sal

8、es so far. Vanke is sitting on Rmb57 billion of unbooked revenue as of end-Jun 2010. We estimate that almost all profit has been locked in for FY10 and 40% for FY11. The full-year margin should stay high at 29% as projects booked this year were mostly pre-sold at high prices in 2009. Maintain OW wit

9、h new Jun-11 PT of HK$12; 23% upside: We roll over our PT timeframe to Jun-11 with new a PT of HK$12 (old Dec-10 PT: HK$10) based on 13x long-term average P/E of FY11E earnings. The stock is trading at only 13.5x FY10E and 10.6x FY11E P/E. The groups strong monthly contracted sales will be the major

10、 driver, in our view. Vankes net gearing jumped to 50% (net debt to equity) as of end Jun-10 from 24% as of end-Dec 2009. This is not high when compared to the industry level. China Vanke (Bloomberg: 200002 CH, Reuters: 200002.SZ) Rmb in millions, year-end December FY08 FY09 FY10E FY11E Sales 38,619

11、 46,048 53,003 69,493 52-week range 11.2 - 6.5 Underlying net profit 4,033 5,330 7,352 8,805 Market cap (HK$MM) 101,196 Core net profit 4,924 4,901 6,895 8,805 Market cap (US$MM) 13,038 Core net profit growth (%) 3% 0% 41% 28% Shares outstanding (MM) 1,315 EPS (Rmb) 0.37 0.48 0.67 0.80 Free float 10

12、0% Core EPS (Rmb) 0.45 0.45 0.63 0.80 Avg daily value (HK$MM) 31.1 Core EPS growth (%) 3% -0.5% 40.7% 27.7% Avg daily value (US$MM) 4.0 DPS (Rmb) 0.05 0.07 0.09 0.11 Avg daily volume 3.7 ROE (%) 13.2 15.4 18.1 18.4 Index - Shenzhen B 661 Core P/E (x) 19.4 19.3 13.5 10.6 Exchange rate 7.76 Div yield

13、(%) 0.6% 0.8% 1.1% 1.3% Share price date 9 Aug 2010 NAV per share (HK$) 10.1 Premium to NAV -4% BV/share (Rmb) 2.9 3.4 4.0 4.7 P/BV (x) 3.0 2.5 2.1 1.8 Source: Company Reports, Bloomberg, J.P. Morgan estimates. 2 Asia Pacific Equity Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 Company D

14、escription P 23% upside Vankes shares have rebounded by 45% from their recent low of HK$6.70 in May, making it the best performing stock among its peers. This was justified, in our view, owing to its strong contracted sales performance. Vanke achieved a record-high sales of over Rmb8.0 billion a mon

15、th in the past two months. In 7M10, Rmb45 billion sales were achieved, up 26% Y/Y, at a high ASP of Rmb11,420/sqm. The strong contracted sales prompted us to revise our FY11E net profit by 18% to Rmb8.8 billion (EPS: Rmb0.80). We leave our FY10 net profit unchanged as the group is scheduled to compl

16、ete only 5.04 million sqm this year, down from 6.05 million sqm in FY09 due to the longer lead time to complete as all units they build this year will be fully fitted. We estimate almost all profit has been locked-in for FY10 and 40% for FY11 since Vanke is sitting on Rmb57 billion unbooked revenue

17、as of end-Jun 2010. At a 15% net margin, this will bring in Rmb8.5 billion in net profit already. Having seen flat core net profit in FY09, Vanke should be back on a profit growth trajectory from this year onward underpinned by improved profit margins in FY10E and volume growth in FY11E. We expect V

18、ankes market share to rise to 2.5% from 1.7% with estimated contracted sales of Rmb80 billion this year (2009: Rmb63 billion) for Vanke. Being the largest developer in the nation, Vanke is a good proxy to play the Chinas housing market. Vanke has penetrated more than 40 cities with 200 projects unde

19、r developments totaling 8.0 million sqm. We roll over our PT timeframe to Jun-11 with a new PT of HK$12 (old Dec-10 PT: HK$10) based on a target P/E of 13x FY11E earnings, which is the groups long-term average P/E. Previously, we used the average of FY10E and FY11E earnings to derive our PT. As almo

20、st all earnings are locked in for FY10E and around 40% for FY11E, it is safe to use FY11E earnings, in our view. Major risks to our PT are whether economic recovery can be sustained, policy measures, and a potential correction in the stock market. The stock is currently trading at 13.5x FY10E P/E, 1

21、0.6x FY11E P/E, and at a 10% discount to our NAV estimate of HK$10.1. We forecast Vanke to achieve 41% core net profit growth in FY10E and 28% in FY11E. Figure 1: China Vanke P/E band chart 10x15x20x25x051015202500 01 02 03 04 05 06 07 08 09 10HK$Source: Bloomberg, J.P. Morgan estimates. We revise u

22、p FY11E earnings by 18% to Rmb8.8 billion on strong contracted sales Vankes core profit growth will see strong growth this year Our price target is based on 13x FY11 PE 5 Asia Pacific Equity Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 Figure 2: China Vanke: A vs. B share A share/B shar

23、e 00.511.522.5Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10A-share /B-ShareA-share/B-share parityA - Share more ex pensiv eA - Share cheaperSource: Bloomberg No change in new construction starts and completion target In view of strong contracted sales so far, the group will stick to its or

24、iginal target to commence 8.55 million sqm new constructions this year against 5.6 million sqm in 2009. Vanke achieved strong contracted sales of 4.0 million sqm in volume and Rmb45 billion in value in 7M10. With more new launches in the next five months, management expects sales can be maintained a

25、t around Rmb8.0 billion a month for the rest of the year. This would translate into 8.0 million sqm (2009: 6.6 million sqm) and over Rmb80 billion (2009: Rmb63 billion) contracted sales for the full-year of 2010. Hence, there is no need to cut new construction starts despite the implementation of ti

26、ghtening measures in May. Vanke also maintains full-year completion target of 5.04 million sqm, of which 3.76 million sqm will be completed in 2H10. Hence, it is expected that profit will grow significantly in 2H10. 38 million sqm land bank for 3-4 years development Vanke has a land bank of 38 milli

27、on sqm in 40 cities. Of this, 30 million sqm has yet to start construction. Managements target is to keep around three years of land bank as it sees no reason to hold a large land bank which will tie up a lot of capital and necessitate the payment of a large land appreciation tax. More importantly,

28、this is in line with the governments policy to not hoard land for appreciation. In 1H10, the group replenished attributable 8.9 million sqm new land in 38 projects against 3.2 million sqm sold. Total land cost amounted to Rmb20 billion (Rmb2,300/sqm) compared with its contracted sales proceeds of Rm

29、b37 billion. The purchases were mostly located in second- and third-tier cities as management sees land cost as too high in first-tier cities. 6 Asia Pacific Equity Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 Figure 3: Average land cost (2006 1H10) Rmb/sqm 2,5083,3652,0662,4012,300-500

30、1,0001,5002,0002,5003,0003,5004,0002006 2007 2008 2009 1H10av g = Rmb2,500/sqmSource: Company reports. Figure 4: New land purchase Attributable GFA in sqm MM 9.34.610.48.9-2.04.06.08.010.012.02007 2008 2009 1H10Source: Company reports. Earnings review and outlook Rmb57.3 billion presales unbooked As

31、 of end-June 2010, Vanke still had Rmb57.3 billion of presales not yet recognized, representing a floor area of 5.3 million sqm. Majority of this would be recognized in 2H10 and 2011. The ASP of the un-recognized sales is high at around Rmb10,811/sqm, about the same as the recognized ASP of Rmb10,93

32、1/sqm in 1H10. We expect margins to stay stable at around 29% in 2H10, but may fall slightly next year in anticipation of lower overall ASP as more supply will hit the market in 2H10. By our forecasts, almost all property sales have been locked in for FY10E and around 40% for FY11. Figure 5: Vanke -

33、 Contracted sales value Rmb in billions 9142152486380010203040506070809004 05 06 07 08 09 10ESource: Company reports and J.P. Morgan estimates. Figure 6: Vanke Nationwide market share in sales value 0.9%1.2%2.1%2.3%1.7%2.2%0.0%0.5%1.0%1.5%2.0%2.5%05 06 07 08 09 10ESource: CEIC and Company reports. A

34、lmost 100% of profit has been locked in for FY10E and 40% for FY11E 7 Asia Pacific Equity Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 Table 2: Vankes rankings in various cities in terms of market share in 1H10 First Second Third Beijing Nanjing Shanghai Shenzhen Suzhou Guangzhou Tianji

35、n Dongguan Shenyang Foshan Wuhan Changchun Wuxi Dalian Qingdao Zhenjiang Source: Company reports. Table 3: China VankeMonthly sales volume and value Jan Feb Mar Apr May Jun July Aug Sept Oct Nov Dec Total Month Avg 2006 Sales area (000 sq m) 136 86 195 232 383 217 257 270 304 476 281 391 3,228 269 R

36、evenue (Rmb MM) 540 870 1,220 1,360 2,340 1,290 1,950 1,684 2,058 3,253 2,240 2,425 21,230 1,769 ASP (Rmb/sqm) 3,971 10,081 6,256 5,862 6,110 5,945 7,588 6,239 6,774 6,830 7,972 6,207 6,577 2007 Sales area (000 sq m) 206 129 291 346 617 722 493 705 908 546 407 767 6,137 511 Revenue (Rmb MM) 1,656 92

37、0 2,040 2,490 4,710 5,660 3,660 6,280 9,384 5,160 4,230 6,170 52,360 4,363 ASP (Rmb/sqm) 8,039 7,132 7,010 7,197 7,634 7,839 7,424 8,908 10,335 9,451 10,393 8,044 8,532 2008 Sales area (000 sq m) 230 196 719 482 583 448 360 474 532 464 421 661 5,570 464 Revenue (Rmb MM) 1,850 1,570 6,680 4,320 5,340

38、 4,370 3,110 4,070 4,310 3,350 3,570 5,340 47,880 3,990 ASP (Rmb/sqm) 8,043 8,010 9,291 8,963 9,160 9,754 8,639 8,586 8,102 7,220 8,480 8,079 8,596 2009 Sales area (000 sq m) 286 517 722 595 697 671 583 495 537 608 520 405 6,636 553 Revenue (Rmb MM) 2,190 3,890 6,140 5,270 6,410 6,860 5,110 4,820 5,

39、460 6,540 5,230 5,500 63,420 5,285 ASP (Rmb/sqm) 7,657 7,524 8,504 8,857 9,197 10,224 8,765 9,737 10,168 10,757 10,058 13,580 9,557 2010 Sales area (000 sq m) 523 211 507 633 470 857 758 3,959 566 Revenue (Rmb MM) 6,260 2,510 6,310 7,800 5,110 8,770 8,440 45,200 6,457 ASP (Rmb/sqm) 11,969 11,896 12,

40、446 12,322 10,872 10,233 11,135 11,417 Source: Company. Figure 7: Recognized average selling price and gross margin Rmb/sqm 4,7885,4666,1646,4078,936 8,9707,97910,39522%27%29%32%30%24%29%29%20%25%30%35%40%45%50%03 04 05 06 07 08 09 10E1,0003,0005,0007,0009,00011,000ASP (R) Gross marginSource: Compan

41、y reports and J.P. Morgan estimates. 8 Asia Pacific Equity Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 38 million sqm total landbank Vanke has purchased 10.3 million sqm attributable land bank since the beginning of the year against 10.4 million in 2009. Vanke will buy more land this y

42、ear than last year. Its total land bank amounted to 38 million sqm. Average land cost was Rmb2,300/sqm compared with Rmb2,000/sqm in 2008 and Rmb3,400/sqm in 2007. It now has over 200 projects in more than 40 cities under construction against 20 projects in 10 cities in 2002. Vankes capex this will

43、amount to Rmb40-50 billion, of which construction cost will be Rmb20 billion and land cost will reach Rmb20-30 billion. Figure 8: Vanke New commenced construction areas Sqm MM 5.07.85.25.68.610.0-2.04.06.08.010.012.02006 2007 2008 2009 2010E 2011ESource: Company reports and J.P. Morgan estimates. Fi

44、gure 9: Vanke Completion and recognized GFA Sqm MM 3.34.55.3 5.45.07.72.93.94.56.15.07.3-2.04.06.08.010.02006 2007 2008 2009 2010E 2011ECompletion Recognzied GFASource: Company reports and J.P. Morgan estimates. Net gearing reaches its maximum level of 50% Vankes financial position has worsened due

45、to its aggressive land acquisitions ytd. The company historically relied on equity issuance to finance its capex and contain net gearing within a comfortable level. The groups net gearing shot up to 50% (net debt to equity) as of end-Jun 2010 from 24% as of end-Dec 2009. Management said this was the

46、 maximum level it could tolerate. Hence, it will not gear up further and will rely on sales proceeds to fund expansion. Vanke proposed to raise Rmb11 billion through new shares issue in early 2009, but CSRC has not approved this yet. Equity fund raising is still pending approval 9 Asia Pacific Equit

47、y Research 11 August 2010Raymond Ngai, CFA (852) 2800-8527 Figure 10: Vanke Total liabilities to total assets 50%55%54%59%60%65%66%68%67%70%0%10%20%30%40%50%60%70%80%01 02 03 04 05 06 07 08 09 1H10Source: Company reports. Figure 11: Vanke Net debt to shareholders equity 25%22%38%12%4%17%27%40%24%50

48、%0%10%20%30%40%50%60%01 02 03 04 05 06 07 08 09 1H10Source: Company reports. Managements outlook on the property market 1. Tightening measures will not be loosened Management expects the central government will not loosen the tightening measures as it is very determined to cool down the red-hot property market. Vanke expects property prices to come down more at end of the year when supply becomes available for pre-sales. Vanke will be flexible in pricing for its new launches so as to achieve 60% sale rate in the first month of launch. In fact, price for their new launches was 10-20

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