【Company Research】Agile (3383 HK) – Stable sales/earnings growth paving the way to Green category

14. Sales to exceed RMB150bn in 2021E: During the conference call, management gave a relatively conservative sales target of RMB150bn, representing 9% YoY increase but reiterated the confidence to beat. This is mainly because 1) Agile plans RMB250bn saleable resources (+12% YoY) this year, out of which 70% was from the newly-launched projects/phases. 2) The assumed sell-through rate is 60% compared to 62% in 2020. The sales momentum so far is better than 2020 and this was evidenced by Agile’s 225% sales increase in 2M21 (partly due to strong Hainan sales).

 

14. Project stakes disposal to PingAn may continue to support earnings. In Dec 2020, the Company announced partial stakes disposal of 7 projects to Ping An and we think this would bring another RMB3.25bn pre-tax profits to Agile which is likely to be booked in 2021E (vs. RMB2.4bn in 2020). Management explains this cooperation with Ping An is more of long-term.

 

14. Target green category in 2021E: the Company has satisfied two of “three red lines” requirements with net gearing and unrestricted cash/debt ratio in at 61% and 1.1x in 2020. Liability/Asset (excl. presales) was 71.9% in 2020, slightly higher than the regulatory requirement of 70%. With continuous earnings enhancement, higher cash collection rate and slightly more JV, the management is confident to lower the ratio to below 70%

 

14. Dividend policy: Management targets to maintain at 40% dividend payout ratio and may revise up after reaching green category.

 

14. 2020 results beat: Agile delivered a solid 2020 core earnings growth of 23% YoY to RMB8.4bn, 5% higher than our estimates. The beat mainly came from higher-than-expected top line growth at 33% YoY to RMB80bn which we mainly attribute to Hainan. GP Margin remained stable at 30.0% in 2020 vs. 30.5% in 2019 and core net margin declined 0.8ppt YoY to 10.4%. The Company declared a HK$1.1/share full year dividend (39% payout ratio).

  

14. Maintain Buy. With unbooked sales of RMB78bn, we revise up 2021/22E revenue by 9-10% to reflect strong sales and completion. GMP was estimated at 30-31% in 2021/22E and as a result we lift the core earnings by 3-4% to reach RMB9.6bn/10.6bn in 2021/22E (+15%/10% YoY). Furthermore, we slightly raise our end-20 NAV forecast from HK$27.78 to HK$29. We raise TP from HK$13.89 to HK$14.52, based on 50% discount to NAV. The Company is trading at 3.8x 2021E PE which looks attractive.