Suning Global (000718): Typical “small and beautiful” real estate enterprises with excellent soil reserves and stable cash flow
The company’s core highlights are: a. Rich 天津夜网 and high quality soil reserves (high profitability), low interest resistance and stable cash flow; b. The margin of safety is significant, and the current market value is about 45% discount to NAV; c. The company actively gives back to shareholders, and the company’s 18 years of repurchase amount4.5.3 billion, dividends of about 8.6.8 billion (dividend rate of 85%), 19 years of repurchase amount5.470,000 yuan, a conservative estimate that the 19-year dividend rate of 50% corresponds to a potential dividend rate of over 5%.In addition, the new business is proceeding cautiously and steadily, with little capital consumption.Maintain “Highly Recommended-A” investment rating and target price of 4.94 yuan / share (25% discount to NAV). (1) The soil reserve is rich and high-quality. Thanks to the low land value and the preferential classification of half of the land reserve, the profitability is very strong.In the past two years, the company has generally maintained a scale of 3 billion to 4 billion, without new land, and the settlement profit has maintained a scale of 1-12 billion.As of H1 in 2019, the company’s unfinished construction area is about 3.2 million square meters (equity ratio of 100%), corresponding to an unfinished value of about 58 billion yuan. Structurally, Nanjing / Wuhu / Shanghai accounted for 68% / 19% / 6% (construction).Surface) caliber), of which the construction area of Nanjing Venice Water City alone accounted for 52%, and the total value of the goods is based on the 18-year sales volume. It is realized that the development has been rich for more than 10 years, and the soil reserves are rich for many years.Before the acquisition, the floor price was low, and the Nanjing Venice Water City plot benefited from the interest rate preferential policy for subsequent land acquisition. The relative increase in the tax increase rate of the land delivered, gradually reducing the trend of house prices, and driving the company’s settlement gross profit / net interest rate to continue to improve.The 18-year comprehensive net profit margin is as high as 30%, and this high profitability is expected to continue. (2) “Strive for stability while progressing” orderly promote industrial transformation and upgrading.One. As for the sports industry, the layout of the industrial chain has been initially completed.Specifically, Wen Chan Group actively promoted the construction of a comprehensive platform for artworks and began to take shape; the performance effect of Suning Art Museum was prominent; Hongyi Culture positioned itself as a film and television culture and entertainment agent, and its affiliated artists were incorporated into the formation of international men’s groups through variety shows.b. In terms of the medical beauty industry, we are focusing on building Suya’s medical beauty brand positioning and upgrading, and appropriately adjusting and improving its business strategy. Currently, there are about 5 stores, which are still in the cultivation stage. They have been slightly reduced but are still manageable. (3) The volume of interest-bearing debt is small and the financial structure is extremely stable.As of the end of the third quarter, the company had an interest rate of approximately US $ 3 billion, an increase of approximately US $ 900 million (mainly long-term borrowing) compared with the end of last year; the company had approximately US $ 2.3 billion in cash on hand, a decrease of approximately US $ 600 million from the end of last yearThis caused the net debt ratio in 19Q3 to increase to 9% compared with the end of 18, but it still belongs to the industry’s extremely low level; the protection ratio of cash against spot interest resistance at the end of the third quarter was as high as 2.7 times, the company’s financial structure is extremely stable. Maintain “Highly Recommended-A” investment rating and target price of 4.94 yuan / share.The company’s core highlights are: a.Rich and high quality soil reserves (high profitability), low interest resistance and stable cash flow; b. The margin of safety is significant. The company’s outstanding value of nearly 60 billion yuan, assuming an average settlement net interest rate of about 28%, is discounted based on 8-10 years of development, and considering the compound annual growth rate of 4%, it can roughly contribute to the assessment of value added.120 billion US dollars, equivalent to nearly 7.8 billion US dollars of equity net assets, equivalent to a net asset value of about 20 billion US dollars, the current market value is about 45% discounted from the net asset value; c. The company actively gives back to shareholders, and the company’s 18 years of repurchase amount4.5.3 billion, dividends of about 8.6.8 billion (dividend rate of 85%), 19 years of repurchase amount5.470,000 yuan, assuming that the scale of the 19-year repurchase and dividend payout has remained at the level of 18 years, it means that the 19-year dividend rate has reached 68%, and even a 50% dividend rate may reach a dividend rate of over 5%.In addition, the new business is proceeding cautiously and steadily, with little capital consumption.It is expected that EPS for 2019-2021 will be 0.37, 0.39, 0.40 yuan / share, the corresponding PE is 10 respectively.1X, 9.7X, 9.2x, maintain “Highly Recommended-A” investment rating, target price 4.94 yuan / share (25% discount to NAV). Risk Warning: The conversion effect is less than expected, and the dividend rate is less than expected.

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