第一上海:维持新世界发展“买入”评级 目标价19港元

First Shanghai: Maintaining a “buy” rating for New World Development, with a target price of HK$19

新浪港股 ·  12/06/2023 14:38

According to a research report published by First Shanghai, New World Development (00017) Hong Kong has a dual engine layout in mainland Hong Kong, places equal emphasis on property development and ownership, maintains steady management and a good financial structure, and has a remarkable brand effect. The recurring revenue ratio is expected to increase to more than 50% of total revenue in 2026. As the company continues to deleveraging to optimize capital expenditure, return capital through the sale of non-core assets, buy back dollar bonds, reduce the net debt ratio, and improve operating efficiency. The bank expects the company's net profit of $670 million, $7.2 million and HK$750 million for the next three years, respectively. Based on the company's historical PB valuation, the bank gave the company a PB valuation of 0.25X in 2024 and arrived at a target price of HK$19 to maintain the “buy” rating.

First, Shanghai's main views are as follows:

Mainland contract sales performance is excellent, and land reserves are abundant

From January to October 2023, the company's mainland contract sales exceeded 12 billion yuan, of which contract sales from July to October were 6.4 billion yuan, completing 42% of the target of 15 billion yuan in fiscal year 2024. The total floor area of the company's land reserves in the mainland is about 4.8 million square meters. About 60% are located in the core metropolitan areas of the Greater Bay Area and Yangtze River Delta region. It is estimated that the value of marketable resources in the Greater Bay Area and Yangtze River Delta will reach 57 billion yuan. In addition, the company participated in investing in 8 urban renewal projects in the Mainland, all located in the core cities of Guangzhou and Shenzhen. The total floor area reached 2.7 million square meters, and the sales value was conservatively estimated at about 80 to 100 billion yuan.

It is expected to benefit from the development strategy of Hong Kong's northern metropolitan area

The Hong Kong Special Administrative Region Government recently issued the “Action Plan for the Northern Metropolitan Area”, which clarifies the development vision and regional plans for the northern metropolitan area. The early layout of the development of the new world is expected to benefit significantly. The company proactively deployed about 15 million square feet of farmland in the northern metropolitan area of Hong Kong, and is currently undergoing large-scale farmland conversion work. It is estimated that 3 million square feet of land reserves can be converted in the short term, and close to 11 million square feet is expected to be converted in the medium to long term, laying a solid foundation for the company's long-term growth.

Simplify business structures and strengthen balance sheets

The company recently completed the sale of more than 60% of its newly founded shares, receiving cash income of approximately HK$21.75 billion, improving the company's financial situation and creating more value for shareholders. Also, in the current high-interest rate environment, the company implemented a debt reduction plan to buy back bonds such as perpetual bonds, and announced that it would buy back up to 600 million US dollars of bonds to optimize financing costs and debt conditions. In the future, the company is expected to continue to sell projects with low IRR, minority equity, and few synergistic benefits with the company's ecosystem as planned, focusing on the high-return real estate business and enhancing the company's core competitiveness.

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