CWTC Co., Ltd.(600007)2024-10-28 06:02Investment Rating - The report assigns a "Buy" rating for the company, marking it as a first-time coverage [2]. Core Views - The company possesses core assets in a prime location in Beijing's CBD, characterized by high quality and irreplaceability. The core asset is the China World Trade Center complex, which benefits from its unique location, proximity to major transportation hubs, and a mix of high-end business services [2][5]. - The company has demonstrated stable rental income and revenue growth despite macroeconomic fluctuations, with high rental rates and occupancy levels across its various business segments [2][5]. - The company has a strong dividend-paying history, with a consistent average payout ratio of 52% since its listing, and a special dividend in 2023 leading to a payout ratio of 104% [2][5]. - The company is expected to benefit from the current interest rate reduction environment, which may enhance its valuation [2][5]. Summary by Sections Company Overview - The company has been developing core assets in Beijing for 40 years, with a total area of 1.12 million square meters, including office buildings, shopping malls, hotels, and apartments [15][32]. - It is a Sino-foreign joint venture with a significant state-owned background, where the major shareholder holds 80.65% of the shares [32]. Business Analysis - The company operates in four main segments: office buildings, shopping malls, apartments, and hotels, all positioned in the high-end market [5][18]. - The office segment has a high occupancy rate, with major global corporations as tenants, ensuring stable revenue [37]. - The shopping mall segment has shown consistent revenue growth, benefiting from high foot traffic and a diverse range of high-end brands [25][35]. - The hotel segment is recovering, with improved operating margins since 2023 [12][27]. Financial Analysis - The company has shown steady revenue and net profit growth, with projected net profits of 1.31 billion, 1.37 billion, and 1.42 billion RMB for 2024, 2025, and 2026, respectively [4][2]. - The company maintains a low debt ratio and strong cash flow, with a return on equity (ROE) consistently above 10% [4][12]. - The average rental income from office buildings and shopping malls has remained stable, contributing to over 90% of total rental income [35][37]. Profit Forecast and Valuation - The company is expected to achieve a price-to-earnings (P/E) ratio of 25.0x in 2024, with a target price of 32.5 RMB per share, indicating a potential upside of approximately 38% from the current price [2][4].