- August 23, 2021
We published a research report on Yuexiu Property (123.HK) on the back of its recent interim results announcement. Please kindly see the full report attached.
Key Highlights:
We believe Yuexiu Property’s growth will be a key beneficiary of the continual development of the Greater Bay Area. The developer’s solid balance sheet, SOE-status and improving execution will be a key competitive advantage in land banking and financing under the current regulatory environment. Maintain Buy.
- Yuexiu Property’s contracted sales grew 19% YoY to RMB52.5bn YTD July with a run-rate of 47% towards its target. We believe it is on track to reach its 2021E 17% contracted sales growth target.
- We believe that any potential earnings surprises will come in the form of the sale of investment properties, which is part of Yuexiu’s normal course of business.
- Yuexiu Property’s 1H21 results were stable with revenues growing 2.2% YoY to RMB24.2bn and core net profit growing 5.5% YoY to RMB2.1bn, representing 45% of our full-year earnings estimate.
- We believe the developer’s unique TOD projects located in prime areas of Guangzhou will not only help to underpin its profit margins but will also achieve a stable sell-through rate and thus inventory management
- The stock is trading at undemanding valuations of 4.1x 2021E P/E, slightly below the industry average of 4.5x.
