CICC: Keeping China Resources Land (01109) outperforming the industry rating target price of HK$46.7
The Zhitong Finance App learned that CICC released a research report saying that there has recently been a systematic correction in the real estate sector. It believes that China Resources Land (01109)'s medium- to long-term first curve management is resilient, and that the second and third curve business growth rate is steady. It is recommended to focus on potential allocation opportunities after market sentiment stabilizes. The bank maintained its profit forecast for 26/27, corresponding to RMB 218.22.7 billion, or -3%/+4% year-on-year. The current stock price corresponds to 0.58 times/0.54 times 26/27 P/B. Maintaining an outperforming industry rating, considering the company's sufficient saleable resources, stable leverage ratio, and relative resilience on the operating side, the bank maintained its target price of HK$46.7 per share, corresponding to 0.94 times/0.88 times 26/27 P/B, corresponding to 61% upward space.
CICC's main views are as follows:
1H26 results are in line with this forecast
The company announced 1H26 annual results: revenue was -29% to 67.9 billion yuan, of which development and sales, operating real estate rental, and light asset management fees remained flat at -39% and +17%, respectively. Due to the adjustment of the settlement structure, the gross margin of 1h26 settlement increased by 1.4ppt to 25.4% year-on-year. Among them, development, sales and leasing operations were -5.6ppt, +0.4ppt to 10.0% and 73.3%, respectively. Finally, core net profit of +2% year-on-year was recorded to reach 10.16 billion yuan, and the mid-term dividend per share remained flat at 0.20 yuan year-on-year, in line with the forecast.
Financially sound, financing costs are low in the industry
At the end of 1H26, interest-bearing debt fell 3.7% from the beginning of the year to 271.2 billion yuan. Short-term loans accounted for 19%, and the net debt ratio rose slightly to 41.0%. The weighted average financing cost at the end of the period was 2.63%, down about 9BP from the beginning of the year. During the period, an additional financing of 11.5 billion yuan was added, and the coupon interest rate was in the range of 1.55%-2.00%.
The first growth curve has strong toughness and sufficient soil storage quality
1H26 achieved contract sales of 116.5 billion yuan, +6% year-on-year (covering -8% of key housing enterprises). At the same time, 1H26 acquired 34.1 billion yuan of land (95% equity ratio), and equity investment intensity and replenishment efforts were 35% and 97%, respectively (covering 29% and 63% of key housing enterprises). The unsold value at the end of 1H26 was about 500 billion yuan, with sufficient reserves. Despite existing housing policies or disrupting sales plans for the fourth quarter, the bank believes that the company is still expected to maintain the leading position in the top three sales figures in the industry.
The second curve steadily realized the growth rate, and the moat continued to expand
The retail sales of the company's own shopping center 1H26 were +16.4% year-on-year to 128.19 billion yuan, and rental revenue was +19.4% year-on-year to 12.44 billion yuan, significantly outperforming social zero. During the period, the second phase of Vientiane City in Xiamen was newly opened, and the number of shopping malls in operation remained at 98. On the asset management circuit, the asset management scale reached 524.3 billion yuan at the end of the period (an increase of 22.1 billion yuan compared to the beginning of the period), and the asset management landscape continued to expand.
Risk warning: The boom in the new housing market exceeded expectations, and rental growth for owned properties fell short of expectations.