Result first take: strong FY21 results to support share price

  • FY21 core earnings grew 10% yoy, in line with expectations alongside a slightly higher than expected gross profit margin driven by robust performance in recurring income businesses
  • The company maintained a high dividend payout ratio of 37% on core earnings, Full year DPS translates to a dividend yield of 4.5%
  • Gross profit margin slid 4ppt to 27%, with development business’ GPM declined to 23.7% as expected. 
  • The company plans Rmb527.8bn saleable resources in 2022 vs planned saleable resources of Rmb505.7bn in 2021
  • Unbooked revenue stood at Rmb217bn, of which 141bn to be recognized in 2022. 
  • 12 new malls are planned to launch in 2022 compared with 9 in 2021.
  • CR Land is our top pick in the sector. We currently have a BUY with TP of HK$49.3

What’s new:

CR Land released a set of in-line FY21 results this morning.

Our view:

Solid 10% yoy growth in core earning with a high dividend payout ratio

  • FY21 core earnings grew 10% yoy, in line with expectations. GPM was slightly above, driven by robust performance from recurring income busineseses
  • Company maintained a high dividend payout ratio of 37% on core earnings with a dividend yield of 4.5%
  • Gross profit margin slid 4ppt to 27%, with development business’ GPM declined to 23.7% as expected. 
  • Rental from shopping malls increased by 38% yoy with GPM of 74% (vs. 71.9% in FY21)
  • Profit from JV increased by 43% to Rmb4.3bn in 2021.

Strong balance sheet with declining financing cost

  • Total debt was well controlled with only 2% growth from Jun-21. Total cash rose 15% over the same period
  • The company reported a net debt ratio of 30.4% by end-2021, 7ppts improvement from Jun-21.
  • Average funding cost improved further from 3.88% in 1H21 or 3.88% in 1H21 to 3.71% in 2021.

Steady growth expected in 2022

  • Company plans Rmb527.8bn saleable resources in 2022 vs planned saleable resources of Rmb505.7bn in 2021
  • Unbooked revenue stood at Rmb217bn as at Dec-21, of which 141bn to be recognized in 2022. 
  • 12 new malls are planned to launch in 2022 compared with 9 in 2021.

More to follow after results briefing this afternoon at 3pm.

Key things to watch for

  • CR Land’s M&A plan under the current market situation
  • Outlook of retail sales and the company’s shopping mall businesses
  • What is the company’s plan for new initiatives like new ecosystem?
  • Land acquisition strategy and pace in 2022
  • Any adjustments to the next five-year plan?
  • Outlook of gross margins of each business segment.