Revenue and core profit increased by 207% to RMB10.6bn and 28.1% to RMB2.51bn in 1H19, respectively. We estimate end-20 NAV to be HK$19.00. As a result, we cut TP from HK$11.82 to HK$11.04. Maintain BUY.
- Recurring income increased 51% in 1H19. Recurring income increased by 51% to RMB1.07bn in 1H19. Eight offices, eight shopping malls and 13 hotels are in operation now. Nine new shopping malls and six new office buildings will be completed and commence operation in coming future.
- 72mn sq m attributable land bank in 38 cities. KWG acquired 16 new projects of attributable GFA of 1.75mn sq m. As at Jun 2019, the Company had invested 153 properties projects in 38 cities with attributable GFA of 17.72mn sq m. Average land cost was RMB5,000 per sq m, which is equivalent to 29.4% of pre-sales ASP in 1H19. Total saleable resources amounted to RMB503bn, of which 52% are in GBA. Furthermore, KWG had signed urban redevelopment agreements with 12 villages in GBA in total GFA of 11mn sq m.
- 50% hit rate of contracted sales by Jul. In 1H19, 95 new projects were launched for pre-sales, of which 15 were new ones. Contracted sales amount and area soared by 11% to RMB36.0bn and 12% to 2.12mn sq m in 1H19, respectively. Including the contracted sales of RMB6.71bn in Jul, KWG achieved hit rate of 50% based on full year sales target of RMB85bn by Jul. About RMB100bn saleable resources are available in 2019, of which 33% and 32% are located at GBA and YRD. As at Jun 2019, presold and unbooked properties amounted RMB53bn (attributable).
- Core profit gained 28% to RMB2.5bn in 1H19. Delivery GFA jumped 152% to 0.65mn sq m and recognized ASP advanced 34.9% to RMB15,014 per sq m in 1H19. Meanwhile, rental income expanded 138% to RMB320mn in the period as more investment properties (IP) operated. Total revenue soared by 207% to RMB10.6bn. GM enlarged by 3.9ppts to 35.0% in 1H19. Although net finance expenses increased by 57% to RMB1.0bn, it offset by 6x increase in profit from JCE (about RMB2.68bn) in 1H19. Net and net profit advanced 1.7x to RMB6.0bn and 28.1% to RMB2.51bn in 1H19, respectively.
- Reiterate BUY. We raise our core earnings forecast by 3.0% to RMB4.87bn in 2019. We also forecast end-20 NAV to be HK$19.00. As a result, we cut TP from HK$11.82 to HK$11.40, based on 40% discount to NAV.
