Core Viewpoint - China Resources Land's recent luxury property launch in Shenzhen, the Shenzhen Bay Luanxi, achieved sales of 13 billion yuan in a single day, indicating a resurgence in the luxury market, but the company is struggling overall in Shenzhen, dropping significantly in sales rankings [1][2]. Group 1: Sales Performance - In the first 11 months of the year, China Resources Land recorded sales of 8.032 billion yuan, ranking seventh among real estate companies in Shenzhen, far behind the top performers like Hongrongyuan (18.255 billion yuan) and China Merchants Shekou (14.396 billion yuan) [1]. - The Shenzhen Bay Luanxi project, developed in partnership with China Overseas Land, is expected to contribute over 7 billion yuan in sales, but this is insufficient to restore the company's previous market dominance [1]. Group 2: Market Dynamics - The luxury market in Shenzhen is becoming increasingly competitive, with new projects like CITIC Xinyue Bay and Lian Tai Chaozong Bay entering the market, which may challenge the sales of existing projects [4]. - China Resources Land's reliance on a few "super projects" has increased, as seen with the Shenzhen Bay Luanxi, which lacks the sustained demand seen in previous flagship projects like Huazhong City [3]. Group 3: Land Acquisition and Development - The company has been less active in acquiring new land, securing only one plot in partnership with China Merchants Shekou this year, which is expected to be developed into high-end residential units [4]. - The Lake Bei redevelopment project, which has been in the pipeline since 2011, is a significant asset for China Resources Land, but recent adjustments to its planning indicate a shift towards residential development to ensure quicker returns [5][6]. Group 4: Financial Pressure - China Resources Land is facing significant financial pressure, with a total debt expected to reach 281.27 billion yuan by mid-2025, and a net interest-bearing debt ratio increasing by 7.3 percentage points within six months [8]. - The company has recently issued 3.9 billion USD in bonds and raised 2 billion HKD through a share placement, marking a significant increase in public financing this year [8]. Group 5: Strategic Challenges - The company must navigate the balance between releasing profits from core assets and managing the financial burden of large-scale redevelopment projects, which poses a long-term challenge for its operations in Shenzhen [9].

Investment Rating - The investment rating for the company is "Buy" (maintained) [2][5][15] Core Views - The company experienced a slight decline in performance but remains active in land acquisition and shows steady growth in its commercial sector [5] - The company is backed by China Resources Group and is a leading urban investment and development operator in the industry [5] - The financial position is stable, with low financing costs and a strong cash position, enabling the company to expand against market trends [5] Financial Data and Profit Forecast - Revenue projections for the company are as follows: - 2023: 251,137 million - 2024: 278,799 million - 2025E: 275,788 million - 2026E: 263,701 million - 2027E: 268,164 million - Year-on-year growth rates for revenue are projected at 21.3% for 2023, 11.0% for 2024, and declines of 1.1% and 4.4% for 2025E and 2026E respectively [4][6] - Net profit attributable to the parent company is forecasted as follows: - 2023: 31,365 million - 2024: 25,577 million - 2025E: 25,787 million - 2026E: 25,998 million - 2027E: 26,653 million - The projected earnings per share (EPS) are 4.40 for 2023, declining to 3.59 for 2024, and slightly increasing to 3.74 by 2027 [4][6] Sales and Land Acquisition - In the first half of 2025, the company reported sales of 1,103 million, a year-on-year decline of 12% [5] - The land acquisition amount reached 447 million, a significant increase of 75% year-on-year, with a land acquisition to sales ratio of 41% [5] - The company has a total land bank of 4,119 million square meters, with 70% located in first and second-tier cities [5] Commercial Performance - The retail revenue from shopping malls increased by 20% year-on-year, with a total of 1,101 million in the first half of 2025 [5] - The company operates 94 shopping malls, with a high occupancy rate of 97.3% [5] - The income from investment properties, including hotels, was 121 million, reflecting a year-on-year growth of 5.5% [5]