CHINA RES LAND(HK:01109) Soochow Securities·2024-05-12 10:02Investment Rating - The report assigns a "Buy" rating for China Resources Land (01109.HK) for the first time [1]. Core Views - China Resources Land is a leading comprehensive real estate developer backed by a state-owned enterprise, focusing on high-quality integrated development and a diversified business model [3][11]. - The company has shown strong performance in sales and land acquisition, particularly in high-tier cities, and has a robust asset management strategy [4][3]. Summary by Sections 1. Company Overview - China Resources Land is a flagship real estate business under China Resources Group, established in 1994 and listed in Hong Kong in 1996 [11]. - The company has transitioned from a regional residential developer to a leading urban investment and development operator, establishing a "3+1" business model that includes development, operational real estate, light asset management, and ecosystem-related businesses [12][13]. 2. Development Business - The company has ranked among the top five in sales since 2022, with over 90% of sales coming from first- and second-tier cities [3][19]. - From 2013 to 2023, the annual compound growth rate of sales was 16.6%, with total sales increasing from 66.31 billion to 307.03 billion yuan [19][21]. - In 2023, the company achieved a sales target completion rate of 102.3%, surpassing the industry average of 89.5% [24]. - The company acquired 68 new projects in 2023, with a land acquisition intensity of 58%, significantly higher than previous years [28][30]. 3. Operational Business - The operational real estate segment has been a stable revenue source, with a focus on shopping centers, which generated 222.3 billion yuan in revenue in 2023, a 30.6% increase year-on-year [43][45]. - The company has developed three differentiated product lines for shopping centers: MixC, MixC Mall, and MixC Town, catering to various market segments [48]. 4. Asset Management Business - The company is transitioning towards a large asset management business, having launched its first consumption REIT with a fundraising of 6.92 billion yuan [4]. - The asset management platform is being established with a significant number of quality assets, providing ample room for REIT expansion [4]. 5. Financial Health - The company has a low financing cost, with a weighted average financing cost of 3.56% in 2023, the lowest in nearly a decade [4]. - Only 29% of interest-bearing liabilities are due between 2024 and 2025, indicating a healthy debt structure [4][55]. 6. Earnings Forecast - The forecasted net profit attributable to shareholders for 2024, 2025, and 2026 is 31.95 billion, 34.10 billion, and 35.98 billion yuan, respectively, with corresponding EPS of 4.48, 4.78, and 5.05 yuan per share [4]. - The report assigns a PE valuation of 8.1X for 2024, corresponding to a target price of 39.4 HKD per share [4].