Investment advisory support|Yu Xiaoming, editor|Gu Jinfeng
Source: Jufeng Investment Advisory, Good Stock Application
The property market ushered in a blockbuster benefit. The central bank has abolished the lower limit of the interest rate policy for commercial personal housing loans for the first and second homes at the national level. People's Bank of China and the State Administration of Financial Supervision and Administration: For resident families who take out loans to purchase commercial housing, the minimum down payment ratio of commercial personal housing loans for the first house is adjusted to not less than 15%, and the minimum down payment ratio for commercial personal housing loans for second houses is adjusted to not less than 25%. The agency pointed out that with the gradual easing of policies, it is expected that market confidence is expected to be boosted, driving sales to pick up, and at the same time, the high-cost projects of real estate companies are gradually digested, and the gross profit margin is expected to bottom out. The bottoming of the industry is expected to be accelerated, and the valuation of the sector may be gradually restored. Bringing the real estate leader today, let's take a look at the company's investment logic.
The central government's easing policies are frequent, and purchase restrictions in non-core cities are fully liberalized
At the central level, since 2024, the five-year LPR has been sharply reduced by 25BP, the real estate financing coordination mechanism has been continuously promoted, and the Politburo meeting proposed to study the policy measures to digest the stock of real estate and optimize the incremental housing, and pay close attention to building a new model of real estate development. At the local level, since the second half of 2023, the purchase restrictions in first-tier cities have been relaxed, and in second-tier cities, purchase restrictions have been fully lifted, mortgage interest rates have been lowered, and the cost of buying a house has been continuously reduced. At the enterprise level, operating property loans can be used to repay loans, and the project financing whitelist is progressing smoothly.
The sales and land acquisition data are under pressure, and the competition in the first- and second-tier markets is intensifying
Sales side: The cumulative sales area and value of the top 100 real estate companies in 2024Q1 decreased by 50.7% and 49.1% year-on-year respectively, and the decline has continued to expand since June 2023, and the market share of the top 100 real estate companies fell from a high of 82.0% to 39.6% in the first quarter. In 2023, the sales amount of leading real estate enterprises will decline by more than half, and the cumulative sales amount of Yuexiu Real Estate and C&D International will increase by more than 10% year-on-year; In 2024Q1, the sales decline of leading real estate enterprises expanded, and the sales of sample real estate enterprises decreased year-on-year, and the overall sales performance was local state-owned enterprises> central enterprises> mixed-ownership enterprises> private enterprises.
Land: In 2023, the cumulative construction area and value of residential land transactions in 100 cities of the Bureau of Statistics will decrease by 30% and 25% year-on-year, respectively. Since the second half of 2023, all cities have successively liberalized the double-limit policy for land auctions, adopting the method of bidding for those with the highest price, and the core second-tier cities have frequently released land auction kings, leaving only Beijing, Shanghai and Shenzhen to retain the double-limit policy for land auctions, and the main city of Hangzhou to retain the price limit for new houses. In 2023, the overall ratio of land acquisition equity of leading real estate enterprises will show an increasing trend, and the investment strategies will converge, with investment in first- and second-tier cities accounting for more than 90%. 5 real estate companies have acquired land with an amount of more than 100 billion yuan, and they are optimistic that their market share will continue to increase in the future.
The performance of real estate companies is less than expected, and real estate valuations are in the historically low range
From the perspective of the financial performance of real estate companies, only 4 of the top real estate companies with profitable performance in 2023 will maintain double growth in revenue and net profit attributable to the parent company. Under the downward pressure of sales, most real estate companies are under pressure on the gross profit margin of project carryover, the pressure on inventory impairment increases, and the profitability is under pressure year-on-year. At the same time, the debt of the leading real estate enterprises continued to be optimized, the overall pressure of interest-bearing liabilities decreased, and the financing cost decreased. According to the holdings of the real estate sector in 2024Q1, the real estate allocation ratio is 0.86% (0.97% in 2023Q4), and the PB valuation is in the historically low range.
Bringing the real estate leader today, let's take a look at the company's investment highlights:
1. The company is a leading real estate company and has become a large-scale joint stock limited company with real estate development as the main body and equal emphasis on the service industry and the financial industry. The company actively transforms and upgrades, lays out town construction, explores overseas markets such as Seattle in the United States, and actively diversifies foreign investment.
2. The company's sales performance is stable and the land reserve projects are abundant.
3. It is estimated that the compound growth rate of the company's net profit attributable to the parent company from 2024 to 2026 will be 10.2%.
Introduction and main business of Binjiang Group
Binjiang Group adheres to the professional concept of "creating life, architect", being the industry quality leader and regional brand leader, and has formed the core competitiveness of "quality-based, strategy-oriented, brand-centered, capable and efficient means". In terms of industrial development strategy, the company has become a large-scale joint stock limited company with real estate development as the main body and equal emphasis on service industry and financial industry. The company actively transforms and upgrades, lays out town construction, explores overseas markets such as Seattle in the United States, and actively invests in foreign diversification, including Internet+, biomedicine, new energy and Industry 4.0, etc., and has fully opened a new blueprint for diversified development.
The concept of Binjiang Group's stock ownership
Broken Net Stocks, Zhejiang Plate, Real Estate Development, Shenzhen Cheng 500, Yangtze River Delta, Margin Trading, Pension Concept, Online Tourism, CSI 500, Securities Holdings, Shenzhen Stock Connect, MSCI China, Leasing and Selling Rights, FTSE Russell, Standard & Poor's, Solid-State Batteries.
What is the status of Binjiang Group in the industry?
In terms of operating income, Binjiang Group is higher than the industry average and ranks 6th in the industry.
What is the basic situation of Binjiang Group's stock issuance?
The total share capital of Binjiang Group is 3.111 billion shares, of which 2.657 billion A shares are in circulation. As of May 17, the total market capitalization was 31,021.1 million, the circulating market value was 26,493.2 million yuan, and the price-earnings ratio was 11.82. The number of shareholders is 34,900. The largest shareholder is Hangzhou Binjiang Investment Holding Co., Ltd., with the top ten shareholders accounting for 71.14% of the shares.
What about the financial data of Binjiang Group stock?
According to the first quarter report of 2024, Binjiang Group's total revenue was 13.701 billion yuan, and the net profit attributable to the parent company was 660 million yuan, with a year-on-year increase of 35.85% in total revenue and a year-on-year increase of 17.84% in attributable net profit.
As of December 31, 2023, by industry, the operating income of the real estate industry was 70.158 billion, and the revenue ratio was 99.60%.
Executive profiles
Qi Jinxing: male, born in 1962. Graduate degree, senior economist, deputy to the 9th, 10th, 11th and 12th People's Congress of Hangzhou, vice president of China Real Estate Association, chairman of the 8th Council of Hangzhou Real Estate Association, chairman of the presidium of the National Council of Zhejiang Entrepreneurs, chairman of the Zhejiang Entrepreneurs Council, vice president of the Zhejiang Zhejiang Merchants Research Association, vice president of the Zhejiang Provincial Business Management Research Association, executive vice president of the Real Estate Professional Committee of the Zhejiang Private Enterprise Development Federation, and MBA graduate enterprise tutor of Zhejiang University. He has won the 2017 Top Ten Zhejiang Entrepreneurs, China Business Master, China Outstanding Real Estate Entrepreneur, National May Day Labor Medal, Zhejiang Provincial Model Worker, China's Top Ten Outstanding Contributors to Promoting Urbanization, China's Housing Industry Leader, China's Real Estate Brand Contributor, the Most Socially Responsible Image Ambassador, Zhejiang Economic Person of the Year, Zhejiang Real Estate Top Ten Figures, Zhejiang Bole Award, Spring Breeze Action Special Contribution Award and other honors. Since 2003, he has served as the chairman and secretary of the Party Committee of the company, and the executive director of Hangzhou Binjiang Investment Holding Co., Ltd.
The company released its 2023 annual report, achieving annual revenue of 70.44 billion yuan, a year-on-year increase of 69.7%; The net profit attributable to the parent company was 2.53 billion yuan, a year-on-year decrease of 32.4%.
Pre-sale payments support future performance, and the financial situation continues to be optimized. In 2023, the company will achieve operating income of 70.44 billion yuan, an increase of 69.7% year-on-year; the net profit attributable to the parent company was 2.53 billion yuan, a year-on-year decrease of 32.4%, mainly due to the increase in the provision for inventory decline in the current period; The unsettled pre-payment at the end of the period was 143 billion yuan, an increase of 9.7% from the beginning of the year. The company maintained a reasonable level of interest-bearing liabilities, and the "three red lines" monitoring indicators continued to maintain a "green file". The consolidated interest-bearing liabilities at the end of the period were 41.52 billion yuan, a decrease of 12.03 billion yuan from the end of the previous year, with bank loans accounting for 80% and direct financing accounting for 20%. After deducting advance receipts, the debt-to-asset ratio was 56.4%, the net debt ratio was 15.1%, the short-term debt ratio was 32.5%, and the cash-to-short-debt ratio was 2.4 times. The average financing cost was 4.2%, down 0.4BP from the end of the previous year. By the end of the period, a total of 121.7 billion yuan of bank credit line was obtained, an increase of 2.9% over the end of the previous year, and the remaining available amount was 81.6 billion yuan. At the end of the period, 1.55 billion yuan of unissued corporate bonds were approved, 4.9 billion yuan of short-term financing bonds and 3.5 billion yuan of medium-term bills were registered.
The sales situation is good, and the new high-quality soil reserves
In 2023, the sales volume will be 153.47 billion yuan, basically the same as the previous year, and CRIC will rank 11th, up 2 places from 2022, and will win the sales champion in the Hangzhou market for 6 consecutive years, and the cash return from equity sales will be 73.2 billion yuan, a record high. 33 new land reserve projects were added, including 27 in Hangzhou, further consolidating Hangzhou's market share; The total construction area of the new projects is 3.33 million square meters, and the equity land is 25.6 billion yuan. At the end of the period, the total construction area of the accumulated land reserve was 13.2 million square meters, of which Hangzhou accounted for 60%, and the cities in Zhejiang Province that were not Hangzhou included Ningbo, Jinhua, Huzhou, Jiaxing and other second- and third-tier cities with solid economic foundations accounted for 25%, and 15% outside Zhejiang Province.
Diversified businesses have been steadily promoted, and new progress has been made in the pension business
In terms of leasing business, at the end of the period, the company held about 378,000 square meters of office buildings, commercial podiums, community floor shops and apartments for rent, achieving rental income of 358 million yuan and a book value of investment real estate of 8.58 billion yuan. The company restarted the agency construction business segment, which played a complementary role in the development business. The first community-embedded high-quality care institution launched by the wellness service brand "Binjiang Hejia" and the home of the elderly has been officially opened.
Investment opportunities
Southwest Securities believes that the compound growth rate of the company's net profit attributable to the parent company from 2024 to 2026 is expected to be 10.2%. Considering the company's solid sales performance, the land bank project is abundant.
Enlightenment Today
In the investment market, no matter what investment method needs to be changed according to the situation, the only thing that remains constant is that you continue to improve yourself to cope with the changing market. —William Gann
Risk Warning
The macroeconomic downturn, the tightening of real estate credit than expected, and the intensification of competition in the industry.
source
Kaiyuan Securities-2023 Real Estate Industry Roundup: Sales Fall Short of Expectations, Performance Under Pressure, Low Valuation Accumulation Sector Value Remodeling-20240513
Southwest Securities-Binjiang Group-002244. SZ-2023 Annual Report Comments: Solid sales performance, continuous optimization of land reserve finance-20240506
(Investment advisory support: Yu Xiaoming, practicing certificate: A0680622030012)
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