Wantong Real Estate (600246): Sitting on the core asset value highlights steady progress
Established real estate companies, well-known brands, residential business and commercial diversification go hand in hand. Vantone Real Estate is one of the leading brand companies in China’s real estate industry, and it is a real estate company with equal emphasis on development and operation.
1) In terms of real estate development business, the company focuses on the Beijing-Tianjin area and has a complete product line. With its excellent quality and services, it already has a high brand awareness in the Beijing-Tianjin area.
2) In terms of commercial real estate, the company has successfully created the commercial property brand of “Wantong Center”. At present, commercial properties in Beijing, Tianjin, and Shanghai have matured and become local landmark buildings.
In the future, through a mature and outstanding commercial complex real estate operation management team, the effective scale of assets will be achieved, and the operating performance will be steadily improved.
Development business: Focus on the first-tier and second-tier cities. The company’s project layout with the ability to withstand market risks has now formed a superior land storage pattern with Beijing, Huanjing as the center, and three major second-tier cities as the fulcrum.
Taking into account: 1) Beijing and second-tier cities have gradually entered the recovery phase after two consecutive years of suppression; 2) the marginal effect of the policy of first-tier and second-tier cities has gradually weakened; 3) some first-tier and second-tier cities have restricted purchases since the second half of the year, and sales have been limitedThe improvement of loosening is expected to increase the marginal easing of policies in the future. We believe that the company’s ability to resist market risks has deteriorated by virtue of its excellent project quality and the advantages of its first- and second-line layout.
Commercial sector: Sitting on core assets, the rents are steadily increasing, and the value is significantly underestimated. The company began to increase the holding of commercial properties in 2010. The commercial resources held are located in the core area of the city, and scarce resources show value.
In terms of rent, total rental income in the first 成都桑拿网 three quarters of 20191.
800 million US dollars (ten years + 10%), rent is 92 yuan / square meter / month (annual + 24%), rental income growth is mainly due to the increase in rental rates and rental increases.
At the same time, considering that the commercial properties held by the company are strategically located and have great potential for future appreciation, the current average price of investment real estate is measured using the cost method, assuming revaluation based on the sales prices of similar properties in the surrounding areas, until the end of the third quarter of 19The fair value of real estate reached 103 trillion, an increase of 63 trillion over the cost measurement method.
Financial analysis: The financial structure is excellent, the debt ratio is at the lowest level in the industry, and it has a higher safety margin. 1) The total asset size has been reduced under reduced leverage, and the sales carry-over has promoted the continuous growth of net assets.It has declined for three consecutive years; the scale of net assets has increased for four consecutive years since 2015.
2) The carry-over of high-priced projects promotes continuous improvement in profit margin levels: the company ‘s gross profit margin and net profit margin in the first three quarters of 2019 increased by 20pct and 25pct respectively compared to 2018, and the profit margin has entered a higher level since 2017, mainly due to the company’s project acquisition timeEarlier, land prices may overlap due to the rapid rise in house prices from 2016.
3) The debt structure is excellent, and the debt ratio continues to improve: At the end of the third quarter of 2019, the company’s asset-liability ratio after replacing prepayments was 4pct higher than in 2018, which has continued to decline since the high point in 2015; interest-bearing liabilities accounted for 20% of total asset%, The lowest level in history.
4) Sufficient monetary funds, compensation for debt repayment pressure, and budget financing advantages: At the end of the third quarter of 2019, the company had US $ 2.3 billion in monetary funds in hand, an increase of + 21%; among interest-bearing debt, long-term bank loans accounted for 92%, and short cash debt ratiosAs high as 12 times, there is no pressure on debt service in the short term; the company’s comprehensive financing cost in 2018 was only 6.
21%, the highest level in the industry, adjusting the goals and foundation for the company’s future strategy.
Investment suggestion: Wantong Real Estate is one of the leading brands in China’s real estate industry. In terms of development business, high-quality soil storage in Beijing and second-tier cities is expected to accelerate the release of performance under the expectation of loosening policy margins in the future.
In terms of commercial real estate, the company’s self-owned commercial properties are strategically located, benefiting from increased occupancy rates and rental growth, as well as the saleability of commercial real estate value-added, with huge growth potential.
Estimated net profit for 2019/20/215.
300 million, an increase of 61.
8% / 22.
9% / 27.
7%, currently expected to correspond to an estimated 17x / 14x / 11x in 2019/20/21, with a “Buy” rating assigned for the first time.
Risk warning: The real estate industry forecast exceeds expectations, and the company’s real estate project settlement exceeds expectations.