重磅花旗超长篇中国房地产行业-新制度：进步的三阶段重新评估方法

zhou_yl

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收藏 2017-09-25

花旗 9 月 18 日超长篇，208页！

– First stage re-rating completed (2H16 to Aug 17): In this stage, the sector’s past distorted valuation(average 5-6x PE) on expectations of a “bubble-burst” was “repaired” (back to7x by Aug), after the physical market depicted its resilience while mega-consolidationbegan. Consolidators proved their quality with strong sales growth (+39% in17E) via market share gains (Top 10 share: 28% in 17E vs 16’s 20%), decentearnings growth with sharp funding costs decline (1H17: 5.4%).

– Now: Second stage re-rating (Aug-17 to mid-19E): Starting with upbeat 1H17 results (link), we seethe second stage of the re-rating being driven by a strong earnings upcycle in ’17-19E(+38%/22%/20%, +26% CAGR, with potential upside) and ROE rebound (13.3%-15.5%in ’17-19E). Visibility is further raised by strong contracted sales (est. +27%in ‘18E even on current landbank) amid accelerating consolidation (Top 10 sharecould hit 35% in ‘18E). Current valuations (7.2x ’18 PE) should further expand,say to 9-10x PE, which would still be cheap on a global basis (average 16.1xPE) even as China offers the highest growth (PEG 0.5x vs Global 1.8x), decentROE (‘17E: 13.3% vs Global 7.5%), attractive yield (‘18E 4.8% vs Global 2.5%)and manageable leverage (‘17E net gearing 70% vs Global 68%).

– Third stage re-rating (post ‘19) – In this stage, valuation multiples further expand, sayto 10-12x PE or even higher, for a more “mature” market - i) Government’slongterm housing mechanism is largely in place; Policy uncertainty reduces; ii)An oligopoly market emerges post mega-consolidation, for a more stablecompetitive landscape; iii) Listed names transform to mature business models(homebuilders, landlords) with cycle-resilience, stable ROE and sustainableyield.

 Long-termhousing mechanism – Govt’s paramount focus in ‘17-19: We expect a stable physical market in ’17-19, withcontrols still on ASPs (flat in ’17-18E) and credit (property-related loans~1/3 of total), and a pacing up of development of the rental market(three-pronged, along with private and social housing). Reduced land supply tothe private market (est. 60% vs 40% rental social) will constrain national primarysales volume (peak in ‘17E, -6% in ’18E), though metro areas should thrive.

 New PEvaluation approach for “homebuilders”; sector TP revised up by 13%: We identify 14 “homebuilders” (dominant DP focus, fastturnover) that we believe are transforming their biz models and are bettervalued by PE multiples. Applying targeted 18E PEs of 6/8/10x, which isconservative versus global homebuilders, we raise TPs by an average of 18% forhomebuilders (a 13% increase for the sector overall), upgrading Agile to Buyaccordingly. We prefer consolidators with visibility – Top Picks: CG,Longfor, Jinmao, R&F, KWG and CIFI.