南薰樓話: Nomura Tips Aoyuan Top Pick

2019年7月30日星期二

Nomura Tips Aoyuan Top Pick

Nomura starts Aoyuan (3883) with Buy with a 14.4 target.

Riding on high asset turn, strong GBA base and proven execution; top pick
Initiate coverage with Buy rating; NAV-derived TP implies 38% upside

From a local developer based in Guangzhou, China Aoyuan (Aoyuan) has transformed itself to a nationwide player with a presence in 70 cities. Our Buy rating reflects its outperforming sales (+28% CAGR in FY19-20F vs peers +15%) and EPS growth (+59% CAGR in FY19-20F vs peers +26%). Trading at a 64% discount, 3.8x FY20F P/E and a 11.8% yield, we consider valuation undemanding vs the small-mid size peer average of 4.9x P/E. Aoyuan is one of our top picks besides CRL (1109 HK), Shimao (813 HK) and CIFI (884 HK).

如果根據野村預測，奧園現價相當於5.7/3.8/2.9倍2019/20/21年預測市盈率，股息率則達到8.0%/11.8%/13.8%。

High earnings visibility
We expect Aoyuan’s core EPS to rise at a +59% CAGR in 2019-20F, outperforming peer the average of +26%, on the back of: 1) rich unbooked revenue (CNY95bn, 77% of our FY19-20F revenue forecast); and 2) improving net margin with stable gross margin and better SG&A expense ratio (core net margin 8.9-9.1% in FY19-21 vs. 8.3% in FY18).

Earnings forecast and valuation
We expect Aoyuan’s core earnings to rise at a +59% CAGR in 2019-20F, from CNY2.57bn in FY18 to CNY6.54bn in FY20F. Backed by resilient earnings growth and a high committed dividend payout (40%), we expect DPS to grow at a +75% CAGR in 2019-20F, translating to 8.0-11.8% dividend yield on FY19-20F DPS. Our target price is HKD14.40, based on a 50% discount to NAV. Our TP also translates to 5.2x FY20F P/E and a 8.7% dividend yield. The targeted P/E valuation is similar to the average of smallmid cap developers under our coverage (5.2x P/E). We find it justifiable considering Aoyuan’s high growth profile, strategic landbank exposure to GBA and high earnings visibility.