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.
