Result first take: FY21 results below, but a slight lift in dividend payout partially cushions downside
- FY21 results below expectations; revenue was above-expected but GPM and JCE contribution both came in lower than expected
- Final DPS declared at HK$0.76/sh, which translates to a full-year DPS of HK$1.21/sh and a slightly higher dividend payout ratio of c.30%
- Balance sheet remained solid despite solid progress made in landbanking during 2H21
- COLI aims to maintain steady growth both in presales and attributable land premium in 2022.
- More to follow after its result briefing to be held at 2:00pm on 31 Mar (Thurs)
- We currently have a BUY on the counter with HK$26.77 TP
Our view
FY21 earnings below; revenue was above-expected but GPM and JCE contribution both came in lower than expected
- FY21 revenue surged 30% y-o-y, which came in above expectations
- Gross margin fell by a sharper than expected 7ppt to c.23.5%, which came in below our and market expectations.
- SG&A as % of revenue and presales were largely stable at 2.9% and 1.9% respectively, in-line
- Contribution from JV and associates fell 24% y-o-y, mainly led by a sharp drop in contribution from JCE projects. This came in below expectation
- Effective tax rate edged up slightly by 0.7ppt to 31.8%.
- FX gain came in at a lower Rmb2.5bn (vs Rmb3.1bn in FY20) This was included in the calculation of reported core profit and in dividend payout as well.
- Reported core net margin (includes FX gain/losses) fell 5ppt to 15%. This translates to a reported core earnings decline of 4%.
- Estimated core earnings margin (excl. FX gain/loss) fell 4ppt to 14%, which translates to flat estimated core earnings growth of 1%.
- Final DPS is declared at HK$0.76/sh, up 4.1% from FY20. This translates to full-year DPS of HK$1.21/sh and a dividend payout ratio of 30% (vs 29.1% in FY20) on reported core earnings with a full-year dividend yield of c.4.9%.
- Unbooked sales as at Dec-21 on a consolidated basis (I.e. excludes COGO) stood at Rmb169.4bn (vs Rmb193.9bn as at Jun-21)
Balance sheet remained solid despite proactive landbanking in 2H21
- Total debt rose 6% from Jun-21, while total cash surged 11.5%. This translates into a decline in net debt and thus a 1ppt improvement net gearing ratio to 31.1% as at Dec-21
- Meanwhile, cash to ST debt improved to 2.9x (vs 2.6x as at Jun-21) while adjusted liabilities to asset ratio stayed largely stable at 53.6%. COLI remains firmly within the “Green Camp” under the “Three Red Lines” Policy.
- Regulated presales proceed stood at Rmb23.5bn, representing c.18% of the company’s total cash. Non-restricted cash to ST debt will still be healthy at 2.4x.
- ST debt as % of total debt is well maintained at c.18% (vs 20% as at Jun-21)
- Cash collection ratio stood at a healthy 95.5% in 2021 (vs 95.0% in 2020).
Steady growth expected in 2022
- The company indicated the intention to achieve steady y-o-y growth both in terms of their 2022 presales and attributable land premium.
More to follow after the company’s online result briefing to be held at 2pm on 31 Mar (Thurs).
Key things to watch:
- Land acquisition strategy in 2022 – will the company remain its proactive stance on land acquisition given its solid financial strength? Will the company consider to turn more active on the M&A space this year give increased opportunities in the space?
- Presales growth outlook – will the company opt to revise down its original 14th Five-Year Plan?
- Expected pace of recognition in 2022 and 2023, GPM outlook as well as possible commitments on earnings growth
- Possible plans to monetise its rapidly growing investment property portfolio
- Dividend policy, among others
