Summary. Revenue and net profit increased by 12.0% to RMB27.1bn and 35.1% to RMB5.08bn in 1H19, respectively. We estimate end-20 NAV to be HK$29.19. As a result, we raise TP from HK$15.93 to HK$16.05. Maintain BUY.
- Interim profit jumped 35% to RMB5.1bn. Revenue and net profit increased by 12.0% to RMB27.1bn and 35.1% to RMB5.08bn in 1H19, respectively. GM narrowed from 49.6% in 1H18 to 30.3% in 1H19 because less contribution by Hainan project. Agile recorded RMB2.2bn after tax gain from the disposal of 34% equity interest in a project company and RMB435mn after tax gain from re-measurement from JV transferred to a subsidiary.
- 58% hit rate of contracted sales by Jul. In 1H19, 108 projects were launched for pre-sales, of which 22 were new ones. Contracted sales amount and area soared by 25.0% to RMB58.2bn and 14.4% to 4.06mn sq m in 1H19, respectively. Including the contracted sales of RMB7.11bn in Jul, Agile achieved hit rate of 58% based on full year sales target of RMB113bn by Jul. About RMB200bn saleable resources in 134 property projects are available in 2019. As at Jun 2019, presold and unbooked properties totaled RMB35bn with estimated GM of 35%.
- 94mn sq m total land bank in 72 cities. Agile acquired 28 new projects of total GFA of 6.92mn sq m with total consideration of RMB23.2bn in 1H19. As at Jun 2019, Agile had invested properties projects in 72 cities (6 new ones) with total GFA of 49.94mn sq m (attributable GFA 39.27mn sq m). Average land cost was RMB3,255 per sq m, which is equivalent to 22.7% of pre-sales ASP in 1H19. Meanwhile, projects in Greater Bay Area accounted for 23% of total land bank.
- Diversified businesses expansion. Revenue from non-property development business increased by 47% to RMB2.4bn in 1H19. Its contribution also increased from 6.8% in 1H18 to 9.0% in 1H19. We expect it will further expand to 11.2% by 2021. A-Living (3319 HK, BUY) posted a 63% earnings growth in 1H19. We forecast A-Living to have a 36.6% CAGR on earnings next three-year. Environmental protection business also recorded a 94% growth in operating profit to RMB225mn in 1H19. We expect its spin-off plan will happen in 2021.
- More than 10% dividend yield. Agile declared interim dividend of HK$0.6 and promised payout ratio as 40-49% in the future. We raise our earnings forecast by 15.4% to RMB9.85bn in 2019. We also forecast end-20 NAV to be HK$29.19. As a result, we raise TP from HK$15.93 to HK$16.05, based on 45% discount to NAV.
