龙光地产(03380.HK)：Results in line; focus on scale and earnings growth ahead

机构：交通银行

评级：

FY17 results in line, FY18 revenue largely locked in. Revenue increased 35% YoY to RMB27.7bn with core profit at RMB4.6bn, largely in line with expectations (our estimates on revenue/core profit: RMB27.2bn/RMB4.46bn). GPM improved 2.5ppts YoY to 34.4% due to increase in booking ASP. Logan proposed a final DPS of HK 22 cents, bringing full-year DPS to HK 41 cents. This represents a total payout of 40%, largely in line with expectation. For 2M18, Logan secured total unrecognized sales of RMB35.1bn, which represents ~89% of our FY18E revenue.

More land-banking from M&A and urban renewal. Logan had total saleable resources of RMB519bn by end-17 (1H17: RMB388bn), of which RMB217bn (1H17: RMB184bn) was from the open market and the remaining RMB302bn (1H17: RMB204bn) came from M&A and urban renewal projects. As at end-17, ~81% of saleable resources were located within the Greater Bay Area including 34%/16% from Shenzhen/Huizhou. Logan expects ~RMB30bn-40bn of urban renewal projects to become mature and turn into saleable land bank in 2018.

RMB66bn sales target for FY18. FY17 contracted sales amounted to RMB43.4bn in FY17. Logan maintained its FY18 attributable sales target at RMB66bn, up 52% YoY, which is backed by RMB130bn planned saleable resources.

3-year plan with faster growth ahead. Management targets 50% CAGR in contracted sales for FY18-20, which implies ~RMB100bn in FY19 and RMB150bn in FY20. Moreover, based on locked-in sales, current ASP and land cost, Logan further expects to achieve 35-36% GPM and 16-17% core profit margin in FY18-20 and to keep its profit growth in line with sales growth.

Maintain Buy and lift TP. We view FY17 results as largely in line with expectations. We see growth prospects as intact with profit growth in step with sales scale growth in FY17. We slightly raise our NAV estimate from HK$15.58 to HK$17.31 per share in view of higher ASP achieved in Shenzhen and new projects acquired YTD. We also raise our TP accordingly from HK$11.68 to HK$12.98. Maintain Buy.