Core Viewpoint - Yuexiu Property announced the public sale of its wholly-owned subsidiary Guangzhou Hongcheng Development Co., Ltd. for approximately 1.092 billion RMB [1] Group 1 - The sale will accelerate the turnover of commercial properties, optimize cash flow management, and improve capital utilization efficiency [2]

Investment Rating - The report maintains a "Buy" rating for the company [3]. Core Views - The company has experienced a significant improvement in sales margins in October, although it faces pressure in achieving its annual sales target. For the period from January to October 2024, the company achieved sales of 91 billion yuan, a year-on-year decrease of 24.8%, completing 61.9% of its 2024 sales target of 147 billion yuan [1][4]. - The company is actively acquiring core land reserves and participating in land storage to revitalize assets. In the first ten months of 2024, the company added a total construction area of 1.95 million square meters in key cities such as Guangzhou, Beijing, and Shanghai, with a focus on high-quality land acquisition [2]. - The company’s financial condition remains stable, with a net debt ratio of 58.6% and a cash-to-short-term debt ratio of 1.53 times as of mid-2024, indicating a strong credit advantage [2]. Summary by Sections Sales Performance - In October 2024, the company achieved sales of 13.36 billion yuan, representing a year-on-year increase of 46.8% and a month-on-month increase of 85.3% [1]. Land Acquisition and Asset Management - The company has focused on acquiring land in core first- and second-tier cities, with 62% of the newly added land area located in Guangzhou, Beijing, and Shanghai. The company plans to transfer three plots of land to the Guangzhou Land Development Center for storage, with a total area of approximately 230,000 square meters and a total consideration of about 13.5 billion yuan [2]. Financial Performance - For the first half of 2024, the company reported revenue of 35.34 billion yuan, a year-on-year increase of 10.1%. However, the comprehensive gross margin decreased by 4.0 percentage points to 13.7%, and the net profit attributable to shareholders was 1.83 billion yuan, down 15.9% year-on-year [2]. - The company’s expected basic EPS for 2024-2026 has been revised down to 0.76, 0.91, and 0.95 yuan, respectively, with the current stock price corresponding to a PE ratio of 7.4, 6.2, and 5.9 times for the same period [3].

Investment Rating - The report assigns an "Overweight" (OW) rating to Yuexiu Property Co Ltd, indicating a favorable outlook compared to peers [1][3][5]. Core Insights - Yuexiu Property is expected to outperform its peers in sales, profitability, and dividend prospects due to its high-quality sellable resources and superior land reserve channels [1][5]. - The company has a strong financial position and low liquidity risk, supported by its state-owned enterprise (SOE) background [1][6]. - The report anticipates a target price of HKD 5.48, representing a potential upside of approximately 20% from the current price [5][6]. Summary by Sections Sales Growth and Land Reserves - Yuexiu Property has approximately RMB 330 billion in unsold sellable resources, with over 65% located in first-tier cities and more than 30% in second-tier cities [5][6]. - The company has maintained a land acquisition strategy that allows it to purchase land at lower costs, with 60% of its unsold resources acquired during a period of significant price adjustments in 2022 [5][6]. Financing and Liquidity - The company has maintained a net debt ratio of 60% and a cash coverage ratio of 1.5 times for short-term debt, indicating strong liquidity [1][6]. - Yuexiu Property benefits from a diversified financing capability, with an average financing cost of 3.57%, one of the lowest among its peers [6]. Management Incentives and Dividend Yield - The management has implemented equity incentive plans to align interests with shareholders, aiming for a stable dividend payout ratio of 40% [2][5]. - The expected dividend yield for 2024-2026 is projected to be between 7-9%, which is among the highest in the industry [2][5]. Valuation and Market Position - The report highlights that Yuexiu Property's current valuation appears attractive at 5.0 times the 2025 price-to-earnings ratio, compared to 5.1 times for its H-share SOE peers [5][6]. - The company is expected to increase its market share to 1.3% in 2024, up from 1.2% in 2023, positioning it among China's top ten developers [5][6].

Financial Performance - In the first half of 2024, the company achieved revenue of approximately RMB 35.34 billion, representing a year-on-year increase of 10.1%[9] - The gross profit margin was approximately 13.7%, a decrease of 4.1 percentage points year-on-year[9] - Profit attributable to equity holders was approximately RMB 1.83 billion, down 15.9% year-on-year[9] - Core net profit was approximately RMB 1.74 billion, a decline of 18.8% year-on-year[9] - The company recorded contracted sales of approximately RMB 55.4 billion, a year-on-year decrease of 33.8%[10] - The company achieved rental income of approximately RMB 297 million from commercial properties, a year-on-year increase of 41.3%[15] - The company’s service group reported revenue of approximately RMB 1.96 billion, a year-on-year increase of 29.7%, with community value-added service income rising by 61.2%[17] - The company’s cash and cash equivalents totaled approximately RMB 48.14 billion, an increase of 4.4% from the beginning of the year, with a net debt ratio of 58.6%[20] - The average borrowing cost decreased by 41 basis points year-on-year to 3.57%, with the average borrowing cost at the end of the period further declining to 3.47%[20] - Basic earnings per share for the first half of 2024 were RMB 0.4550, down from RMB 0.6345 in the same period of 2023[67] Sales and Market Position - In the Greater Bay Area, contracted sales amounted to approximately RMB 26.11 billion, accounting for 47.1% of total contracted sales[11] - The company maintained its leading market position in the Greater Bay Area and ranked 9th in the industry based on contracted sales[10] - The average contract sales price in the first half of 2024 was approximately RMB 29,500 per square meter, a year-on-year decrease of 12.7%[34] - The total contracted sales amount in East China was approximately RMB 12.88 billion, a year-on-year decrease of 30.9%, accounting for 23.2% of the group's total[39] - The group's contracted sales in the Central and Western regions amounted to approximately RMB 8.94 billion, a year-on-year decrease of 25.8%, representing 16.2% of the total[40] - In the Northern region, the group's contracted sales reached approximately RMB 7.47 billion, a year-on-year increase of 9.6%, accounting for 13.5% of the total[41] Land Acquisition and Development - The company acquired 12 new land parcels with a total construction area of approximately 1.72 million square meters, with 66% of the new land reserves obtained through a diversified acquisition model[13] - As of June 30, the company had total land reserves of approximately 25.03 million square meters, with 94% located in first-tier and key second-tier cities[14] - The company has ongoing construction projects with a total area of 6.34 million square meters in the Greater Bay Area[54] - The company is focusing on optimizing land reserve structure and regional layout[50] - The Greater Bay Area accounts for approximately 41.2% of the total land reserve, while the East China region accounts for 19.1%[50] Financial Management and Strategy - The company is committed to maintaining a prudent financial policy, ensuring compliance with the "three red lines" and managing liquidity risks effectively[30] - The company plans to continue optimizing its debt structure and managing interest rate risks in response to market changes[78] - The company is focused on managing foreign exchange risks and optimizing its debt structure in response to market fluctuations[80] - The company has taken measures to manage foreign exchange risk, with foreign currency borrowings accounting for about 18% of total borrowings[79] - The company is committed to enhancing its market position through strategic land acquisitions and development projects[50] Cash Flow and Liquidity - The company's cash flow from operating activities for the six months ended June 30, 2024, showed a positive trend, contributing to the overall financial stability[106] - The net cash generated from operating activities for the six months ended June 30, 2024, was RMB 6,130,253, a decrease of 45.1% compared to RMB 11,316,664 for the same period in 2023[107] - The total cash and cash equivalents at the end of the period were RMB 25,582,007, down from RMB 30,278,611 at the end of June 2023, reflecting a decrease of 15.5%[109] - The group’s total borrowings, including lease liabilities, reached RMB 111.1 billion as of June 30, 2024, reflecting a strategic approach to financing[197] - The group maintains a rolling budget for cash reserves, including unutilized borrowing facilities and cash equivalents, to manage liquidity needs effectively[192] Employee and Management Compensation - The total salary paid to employees for the six-month period ending June 30, 2024, was approximately RMB 1.632 billion, with a workforce of about 18,800 employees[82] - The total remuneration for key management personnel for the six months ended June 30, 2024, was RMB 4,956,000, a decrease from RMB 5,190,000 for the same period in 2023[176] - The company has implemented share incentive plans to align employee interests with those of shareholders, enhancing retention and performance[82] Future Outlook - The company anticipates a noticeable improvement in the Chinese economy by Q4 2024, supported by increased domestic policy efforts[80] - Future guidance indicates a strategic emphasis on mergers and acquisitions to drive growth and increase market share[106]

Investment Rating - The investment rating for the company is "Outperform the Market" [4][5] Core Viewpoints - The company maintains a strong financial position with stable operating performance, achieving a revenue of RMB 35.34 billion in the first half of 2024, a year-on-year increase of 10.1%. However, the net profit attributable to the parent company decreased by 15.9% to RMB 1.83 billion [4][7] - The company continues to consolidate its leading position in the Greater Bay Area, with total contract sales amounting to approximately RMB 55.4 billion, a year-on-year decline of 33.8% [4][7] - The company has adopted a "commercial and residential dual-platform" strategy, with commercial property operating income increasing by 4.8% to RMB 1.33 billion, and rental income rising by 41.3% to RMB 297 million [4][7] Summary by Relevant Sections Financial Performance - In the first half of 2024, the company reported total revenue of RMB 35.34 billion, with a gross profit margin of 13.7%, down 4.1 percentage points year-on-year. The asset-liability ratio, net debt ratio, and cash short-term debt ratio were 68.3%, 58.6%, and 1.53 times, respectively, maintaining a "green" status under the "three red lines" policy [4][6][7] - The average borrowing cost decreased to 3.47% by the end of the period, with a weighted average borrowing rate of 3.57%, down 41 basis points year-on-year [4][6] Market Position - The company achieved contract sales of RMB 261.1 billion in the Greater Bay Area, RMB 128.8 billion in East China, RMB 89.4 billion in Central and Western China, and RMB 74.7 billion in Northern China, representing 47.1%, 23.2%, 16.2%, and 13.5% of total contract sales, respectively [4][7] Strategic Initiatives - The company has implemented a "6+1" diversified land acquisition model, acquiring 12 plots of land with a total construction area of approximately 1.72 million square meters in major cities, with 66% of the new land reserves obtained through this model [4][8] - The company continues to enhance the interaction between its commercial property and real estate investment trust (REIT) platforms, with the REIT achieving operating income of RMB 1.034 billion, a year-on-year decrease of 2.5% [4][7] Valuation - The forecasted EPS for 2024 is RMB 0.81, with a projected market capitalization range of HKD 28.5 billion to HKD 35.7 billion, corresponding to a reasonable value range of HKD 7.09 to HKD 8.86 per share [5][8]

Investment Rating - The report maintains a "Buy" rating for the company [2][8] Core Insights - The company's net profit has been under pressure, with a core net profit of 1.74 billion RMB in the first half of 2024, a decrease of 18.8% year-on-year, despite a revenue increase of 10.1% to 35.34 billion RMB [1] - The company has a sufficient amount of sold but unrecognized revenue, totaling 190.91 billion RMB, which supports future performance [1] - The company has maintained a healthy financial status with all "three red lines" indicators in the green zone, indicating a stable financial health [1] Financial Performance - In the first half of 2024, the company achieved a revenue of 35.34 billion RMB, a year-on-year increase of 10.1% [1] - The gross profit margin decreased to 13.7%, down 4.1 percentage points year-on-year, attributed to increased sales and marketing costs [1] - The average borrowing rate decreased to 3.57%, down 41 basis points year-on-year [1] Sales and Market Position - The company reported a sales amount of 55.4 billion RMB in the first half of 2024, a decline of 33.8% year-on-year, ranking ninth nationally [1] - In the Greater Bay Area, the company achieved a contract sales amount of approximately 26.11 billion RMB, accounting for 47.1% of total sales [1] Land Acquisition and Development - The company has expanded its land reserves through a diversified acquisition model, adding 12 plots of land with a total construction area of approximately 1.72 million square meters [1] - As of the first half of 2024, 94% of the company's land reserves are located in first- and second-tier cities, with the Greater Bay Area and Guangzhou accounting for 77.9% [1] Future Projections - Revenue projections for 2024-2026 are estimated at 83.97 billion RMB, 86.84 billion RMB, and 92.08 billion RMB, with year-on-year growth rates of 4.7%, 3.4%, and 6.0% respectively [1][2] - The projected PE multiples for 2024-2026 are 4X for both 2024 and 2025, and 3X for 2026 [1]

Investment Rating - The report maintains a "Buy" rating for the company [3] Core Views - The company's performance in 1H24 was impacted by a decline in gross margin and impairment provisions, with revenue of 35.34 billion yuan (up 10.1% year-on-year) and a net profit attributable to shareholders of 1.83 billion yuan (down 15.9%) [1] - The management has set an annual sales target of 147 billion yuan, reflecting a year-on-year growth of 3.5%, despite the challenges faced in the first half of the year [1] - The company has a strong land reserve of 25.03 million square meters, with approximately 94% located in first and second-tier cities, providing a solid foundation for future sales [1] Financial Performance - In 1H24, the company reported a gross margin of 13.7% (down 4.0 percentage points) and a net profit margin of 5.2% (down 1.6 percentage points) [1] - The company’s total debt as of the end of the period was 110.24 billion yuan (up 10.4%), with a cash-to-short-term debt ratio of 1.53 times [1] - The average financing cost decreased to 3.57% (down 0.41 percentage points) [1] Sales and Market Position - The company achieved a contract sales amount of 55.4 billion yuan in 1H24 (down 33.7%), ranking 9th among the top 100 real estate companies in China, showing a slight improvement from the previous year [1] - As of July 2024, the company completed 41.1% of its annual sales target, indicating potential challenges in achieving the full-year goal [1] Land Acquisition Strategy - The company adopted a diversified land acquisition strategy, securing 12 plots of land with a total construction area of 1.722 million square meters, focusing on high-energy cities such as Shanghai, Beijing, Guangzhou, Hangzhou, Chengdu, and Hefei [1] - The management's commitment to maintaining the sales target despite market conditions reflects their confidence in the company's operational strategy and land reserves [1] Earnings Forecast - The report adjusts the earnings forecast for the company, projecting revenues of 86.78 billion yuan, 92.70 billion yuan, and 99.27 billion yuan for 2024, 2025, and 2026 respectively, with net profits of 3.04 billion yuan, 3.10 billion yuan, and 3.21 billion yuan for the same years [2][7]

Investment Rating - The report maintains a "Buy" rating for the company, indicating a positive outlook for its stock performance relative to the market [4]. Core Insights - The company's performance in H1 2024 showed a decline below market expectations, with revenue of 35.34 billion yuan, a year-on-year increase of 10.1%, but a net profit drop of 15.9% to 1.83 billion yuan. The core net profit also decreased by 18.8% to 1.74 billion yuan, with earnings per share down by 28.3% to 0.455 yuan [4]. - Despite the decline in sales, the company remains actively engaged in land acquisition, focusing on core first- and second-tier cities. In H1 2024, the company achieved sales of 55.4 billion yuan, a decrease of 33.8% year-on-year, completing 38% of its annual sales target [4]. - The company has a strong cash position with monetary funds of 48.14 billion yuan, a 4.4% increase from the end of 2023, and a low average financing cost of 3.57% [5]. Summary by Sections Financial Performance - In H1 2024, the company reported operating revenue of 35.34 billion yuan, a 10.1% increase year-on-year, but a gross profit of 4.85 billion yuan, down 15.0% year-on-year. The comprehensive gross margin was 13.7%, a decrease of 4.1 percentage points [4]. - The company’s net profit margin was 5.2%, down 1.6 percentage points year-on-year, with a total of 1.91 trillion yuan in unsold but contracted sales, which is 2.5 times the revenue from the previous year [4]. Sales and Land Acquisition - The company’s sales volume decreased by 33.8% year-on-year to 55.4 billion yuan, with a sales area of 1.88 million square meters, down 24.0% year-on-year. The average selling price per square meter was 29,500 yuan, a decrease of 12.7% [4]. - In H1 2024, the company acquired land in seven cities, totaling 1.72 million square meters, with a focus on first- and second-tier cities, maintaining a diversified land acquisition strategy [4]. Financial Health - The company reported a total debt of 110.2 billion yuan, with a net debt ratio of 58.6% and a cash-to-short-term debt ratio of 1.53 times, indicating a strong financial position [5]. - The company’s projected net profit for 2024-2026 is adjusted to 3.0 billion, 3.2 billion, and 3.5 billion yuan respectively, reflecting a cautious outlook amid declining industry conditions [4].

Investment Rating - The report maintains a "Buy" rating for the company, Yuexiu Property (123 HK), with a target price of HKD 6.60, indicating a potential upside of 72.8% from the current price of HKD 3.82 [2][6]. Core Insights - The company's performance for the first half of 2024 met expectations, with revenue increasing by 10.1% year-on-year to RMB 35.34 billion. The real estate development and management segments saw revenue growth of 10.2% and 45.2%, respectively [2][5]. - The gross profit margin declined by 4.1 percentage points to 13.7%, primarily due to a decrease in development margins. Core net profit fell by 18.8% to RMB 1.74 billion, aligning with forecasts [2][5]. - The company expects sales to improve in the August to October period, although achieving the full-year sales target of RMB 1.47 trillion may be challenging under current market conditions [2][5]. - The average financing cost decreased by 41 basis points to 3.57%, with expectations for further reductions in a more liquid environment [2][5]. Financial Overview - For the first half of 2024, the company reported a revenue of RMB 35.34 billion, with a gross profit of RMB 4.85 billion, reflecting a gross margin of 13.7% [5][7]. - The company has a stable net debt ratio of approximately 58.6%, with cash levels increasing to RMB 48.14 billion [2][5]. - The projected revenue for 2024 is RMB 86.79 billion, with a core profit forecast of RMB 3.27 billion, indicating a decline of 15.2% year-on-year [4][7]. Market Position - The company holds a land bank of 25.03 million square meters, with about 40% located in the Greater Bay Area, and approximately 44% of its projects are in first-tier cities [2][5]. - The management remains optimistic about capturing market demand when conditions improve, supported by a solid financial position and favorable government policies for state-owned enterprises [2][5].

Investment Rating - The investment rating for the company is "Outperform the Market" [3][12] Core Views - The company's performance has been under pressure, with a slight decline in gross margin. In the first half of 2024, the company achieved revenue of 35.3 billion RMB, a year-on-year increase of 10.1%, while net profit attributable to shareholders was 1.8 billion RMB, a year-on-year decrease of 15.9% [1][4] - The company has maintained a stable dividend payout, with an interim dividend of 0.173 RMB per share, accounting for approximately 40% of core net profit [1][4] - The company is focused on the Greater Bay Area, achieving 37.7% of its annual sales target in the first half of 2024, despite a decline in sales area and amount [1][6] Summary by Sections Financial Performance - In the first half of 2024, the company reported a revenue of 35.3 billion RMB, a 10.1% increase year-on-year. However, the net profit attributable to shareholders decreased by 15.9% to 1.8 billion RMB, and core net profit fell by 18.8% to 1.7 billion RMB. The gross margin was approximately 13.7%, down 4.1 percentage points year-on-year [1][4][6] - The company’s financial health remains robust, with a debt-to-asset ratio of 68.3% and a net debt ratio of 58.6% as of the end of the first half of 2024 [1][8] Sales and Market Strategy - The company completed a sales area of 1.88 million square meters in the first half of 2024, a year-on-year decrease of 24.0%, with sales amounting to 55.4 billion RMB, down 33.8% year-on-year. The sales distribution by region shows that the Greater Bay Area accounted for 47% of total sales [1][6][8] - The company has adopted a diversified land acquisition strategy, adding 12 plots of land with a total construction area of approximately 1.72 million square meters, 88% of which are located in first-tier and key second-tier cities [1][6] Financial Forecasts - The company is expected to maintain its profit forecasts, with projected net profits of 3.2 billion RMB and 3.3 billion RMB for 2024 and 2025, respectively. The earnings per share are expected to be 0.79 RMB and 0.82 RMB for the same years, corresponding to a price-to-earnings ratio of 4.2 and 4.0 times [1][9][10]