Revenue and core profit increased by 234% to RMB25.0bn and 37% to RMB5.22bn in 2019, respectively. We raise TP from HK$11.04 to HK$13.70, based on 30% discount to NAV. Maintain BUY.
- Core profit beat our & street estimates. Delivery GFA jumped 342% to 1.77mn sq m and rental income surged 65% to RMB627mn in 2019. Total revenue and net profit soared by 234% to RMB25.0bn and 143% to RMB9.81bn in 2019, respectively. Core profit jumped 37% to RMB5.22bn, which was 7.0% and 4.6% higher than our and street estimates. Full year dividend rose 32% to RMB0.74/share, equivalent to 45% core payout ratio.
- RMB103bn sales target in 2020. Contracted sales amount and area soared by 31% to RMB86.1bn and 24% to 4.92mn sq m in 2019, respectively. The Company aims at RMB103.3bn sales target in 2020, based on RMB170bn saleable resources. Furthermore, it hopes to achieve a 30-40% CAGR for contracted sales next 2-3 years. As at end-19, presold and unbooked properties amounted to RMB63bn, which recorded ASP of RMB16,000/sq m.
- 17.01mn sq m attributable land bank in 39 cities. KWG acquired 26 new projects of attributable GFA of 2.47mn sq m in 2019. As at end-19, the Company had invested in 156 property projects in 39 cities (newly entered Xian and Kunming) with attributable GFA of 17.01mn sq m. Total saleable resources amounted to RMB510bn, of which 50% are in GBA. Furthermore, KWG had signed urban redevelopment agreements with 26 villages in GBA for total GFA of 13.7mn sq m. Now, it is negotiating on 11 projects and wishes to finalize six projects in 2020.
- Recurring income increased 55% in 2019. Recurring income increased by 55% to RMB2.19bn in 2019. As at end-19, 0.7mn sq m of shopping malls and 0.35mn sq m of offices were under operation with respective occupancy rate of 92% and 90%. In the future, nine shopping malls and seven offices will complete and operate. On the other hand, property management business is another growth engine with revenue rising 79% to RMB1.0bn in 2019.
- Reiterate BUY. We raise our core earnings forecast by 7.8% to RMB6.2bn in 2020 and 21.6% to RMB7.3bn in 2020. We also forecast end-20 NAV to be HK$22.84. As a result, we raise TP from HK$11.40 to HK$13.70, based on 40% discount to NAV.
