NJGK(SH:600064)2024-07-22 11:30Investment Rating - The report suggests that Nanjing Gaoke (600064.SH) is worth studying due to its undervalued stock price compared to its net asset value and consistent profitability [15][12]. Core Viewpoints - Nanjing Gaoke has a current stock price around 6 RMB, while its net asset value exceeds 10 RMB per share. Over the past five years, the company has distributed over 3.13 billion RMB in cash dividends and maintained an average ROE of approximately 12% [2][12]. - The company has a well-structured business model that integrates land development, infrastructure construction, and high-tech industry investments, creating a closed-loop business chain [8][9]. - Despite a strong historical performance, the company faces significant challenges in its real estate sector, particularly in sales and project completion, which could impact future profitability [50][53]. Summary by Sections Company Overview - Nanjing Gaoke was established in 1992, primarily focusing on land development and infrastructure construction in the Nanjing Economic and Technological Development Zone, with the Nanjing Municipal Government as its controlling shareholder [4][17]. Business Operations - The company engages in various activities, including infrastructure construction, property management, and high-tech industry investments. In the current year, it invested 220 million RMB in several infrastructure projects, generating significant revenue from municipal infrastructure [6][18]. - The real estate segment has been under pressure, with a reported 99.49% year-on-year decrease in contract sales area in Q1 2024, indicating a challenging market environment [42][43]. Financial Performance - Nanjing Gaoke reported a cumulative net profit exceeding 10 billion RMB over the past five years, with a total market capitalization of around 10 billion RMB as of July 2024 [13][12]. - The company has significant assets, including 116.6 billion RMB in inventory and 174.84 billion RMB in long-term equity investments, which represent 31% and 46% of its total assets, respectively [9][56]. Investment Strategy - The company has made strategic investments in various sectors, including a 2.03 billion RMB stake in Nanjing Commercial Bank and a 1.9 million RMB investment in a venture capital firm, indicating a focus on high-growth potential areas [7][56]. - Nanjing Gaoke's investment in Nanjing Bank, valued at approximately 14 billion RMB, serves as a stable income source, contributing significantly to its overall investment returns [66][88]. Market Challenges - The real estate market's downturn poses risks to Nanjing Gaoke's profitability, with the company having to account for asset impairment due to unsold properties [25][50]. - The lack of new land reserves and projects in the pipeline raises concerns about future growth prospects, particularly in the real estate sector [53][54].