【Company Research】Sinic Holdings (2103 HK) – Rising star from Jiangxi
- A rising developer from Jiangxi. Sinic Holdings (Group) Company Limited (“Sinic”) is a large-scale and comprehensive property developer in the PRC, focusing on the development of residential and commercial properties. Headquartered in Shanghai, Sinic commenced its first project in Nanchang, Jiangxi in 2010. Through almost 10 years of operations, Sinic has established a leading position among residential property developers in (i) Jiangxi Province, and expanded into the (ii) Yangtze River Delta Region, (iii) the Greater Bay Region and (iv) the Central and Western China Core Cities and Other Regions with High-Growth Potential.
- Strong pipeline in Nanchang and Huizhou. As of 31 Jul 2019, total land bank attributable to the Company amounted to approx.15.0mn sq m. Sinic holds a firm lead in the Jiangxi real estate market. According to the C&W Report, the Company led in terms of total contract sales from residential properties in 2018, and in the same period was ranked first among property developers, both in Nanchang and Ganzhou, based on total area of residential properties sold. As of 31 Jul 2019, land bank in Jiangxi and GBA amounted to 7.4mn sq m and 3.5mn sq m, accounting for 50% and 23% of total land bank, respectively. In specific, Nanchang and Huizhou are the two key markets of Sinic, accounting for 40% and 20% of land bank, respectively.
- Forecast net profit to grow at a CAGR of 106% from 2018 to 2021. Net profit attributable to shareholders were RMB62mn, RMB95mn and RMB414mn in 2016-18, respectively. Corresponding net profit margin attributable to shareholders were 2.8%, 1.8% and 4.9% in 2016-18. Driven by strong project delivery in the forecast period, we forecast net profit attributable to shareholders to be RMB 1,468mn, RMB 2,739mn and RMB 3,618mn in 2019-21, respectively, representing a CAGR of 106.0% next three years.
- Initiate with BUY. Using discount to NAV method, we estimate end-FY20 NAV of Sinic to be RMB8.69 per share. Given 50% discount and RMB 0.90=HK$ 1.00 assumption, we have our TP at HK$4.83. Initiate with BUY.
