第一上海:维持新世界发展“买入”评级 目标价23.5港元 租金收入有望带动业绩增长

First Shanghai: Maintaining New World Development's “Buy” Rating Target Price of HK$23.5 Rental Revenue Is Expected to Drive Performance Growth

新浪港股 ·  10/09/2023 13:07

First Shanghai released a research report stating that New World Development (00017) has a twin-engine layout in mainland Hong Kong, places equal emphasis on property development and ownership, and has maintained steady management and a good financial structure, and the brand effect is remarkable. As the company continues to deleveraging to optimize capital expenses, reduce net debt ratios, improve operating efficiency, and return funds through the sale of non-core assets. The company's net profit for the next three years is estimated to be HK$970 million, $1.05 billion and HK$1.15 billion respectively. Based on the company's historical PB valuation, the bank gave the company a PB valuation of 0.3X in 2024, arrived at a target price of HK$23.5, maintaining the purchase rating.

Core earnings increased 21% year over year. In fiscal year 22/23, the company recorded revenue of HK$95.21 billion, up 40% year over year; core profit increased 21% year over year to HK$11 billion; profit attributable to shareholders of HK$900 million. A final dividend of HK$0.3 per share is proposed. A special dividend of HK$1.59 per share will also be paid, pending completion of the sale of shares in the newly created project. In FY2023, the company's average financing cost was 4%, and the net debt ratio was 48.7%.

The contract sales situation is good, and the soil reserves are abundant. The company achieved contract sales of HK$8.86 billion in Hong Kong during the period. As of the end of June, a total of 1,681 residential units were sold on behalf of Hong Kong. The company expects to launch six residential projects in stages in fiscal year 2024, with more than 3,000 units. During the period, the company's development strategy and brand effect contract sales were ideal for the core areas of first-tier cities in the Mainland. The contract sales volume was 15.13 billion yuan, and the sales area was 3202,000 square meters.

Furthermore, the company has high-quality land storage in Hong Kong and the Mainland. By the end of June 2023, the company had 8.14 million square feet of land storage in Hong Kong, of which about 3.37 million square feet of property development. In addition, the company has 16.36 million square feet of agricultural land storage in the New Territories, 90% of which is located in the northern metropolitan area, which is expected to benefit from improved land and housing supply in Hong Kong and development strategies in the northern metropolitan area. The company has 4.773,000 square meters of land storage in mainland companies, of which the Greater Bay Area and Yangtze River Delta regions account for 60%. Core land storage is located in key Tier 1 and 2 cities such as Guangzhou, Shenzhen, Foshan, Wuhan, Shanghai, Ningbo, Hangzhou, Beijing, and Shenyang, providing sufficient resources for the Group's sustainable development.

Rental income has increased steadily, reflecting the ability to operate continuously. During the period, the company's rental revenue in Hong Kong reached HK$3.09 billion, an increase of 10% over the previous year, mainly due to the improvement of the retail environment after the national switch, the improvement in K11 operating efficiency, and the improvement in the rental rate. The Mainland's rent revenue was HK$1.91 billion, and the overall occupancy rate was steady. The company currently has 18 K11 projects in operation, including 6 in Hong Kong and 12 in the Mainland, with an overall operating floor area of 1.499 million square meters. The company expects that by fiscal year 2026, K11 will cover 10 key cities in mainland China, with a total area of 2.97 million square meters. Efficient operating efficiency and abundant reserves are expected to drive a compound annual growth of 30% in recurring rental income.

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