Weak sentiment to drag on valuation
? A-Living’s FY21 audited financials are of no material difference from its
unaudited version.
? Management expects 80m-90m sq m p.a. growth in contracted GFA through
FY25F, driven by third-party expansion and M&As.
? Management also explained that the Rmb3.3bn restricted cash arrangement
it made was for some planned M&As.
? Reiterate Hold with a lower TP of HK$12.3 (5.3x CY22F P/E), as we lower
our target PEG multiple to 0.35x.
Audited financials no material difference from published results
A-Living hosted a post-results analyst conference call this afternoon; it had announced its
FY21 audited financials on 29 Apr. While there was no material difference to its reported
net profit and cash balance, it declared a total DPS of Rmb0.41 for FY21, meaning that it
slashed its payout ratio to 25% (FY20: 39.5%). Management explained that the yoy
reduction in DPS was because A-Living did not declare any special dividend for FY21; its
ordinary DPS was actually up 24% and was largely in line with its EPS growth (27%).
Targeting 80m-90m sq m p.a. growth in contracted GFA
A-Living’s contracted gross floor area (GFA) increased 140m sq m to 663m sq m at endFY21, driven by M&As (e.g. New CMIG PM and Shandong Hongtai) and third-party (3P)
contracts (accounting for 85% of FY21 newly added GFA but excluding M&As).
Management still expects 80m-90m sq m p.a. growth in contracted GFA, mainly from 3P
expansion and M&As, with little reliance on related parties due to slowdown in sales of
development properties; it aims to grow its contracted GFA to 1.1bn sq m by end-FY25F.
Some financial impact of recent lockdown on FY22F financials
As a result of Covid-related lockdowns in some cities, management expects c.2% impact
in revenue and an increase in operating expenses in FY22F. We have factored this in our
FY22F EPS. However, while management expects fast revenue growth in community
value-added services (VAS), we believe longer-than-expected lockdowns would hurt its
segment revenue growth in FY22F. As regards to its restricted cash of Rmb3.3bn,
management explained that it made that arrangement to secure a basket of potential
M&A targets, and emphasised that the entire amount was released by end-Apr 22.
Reiterate Hold with a lower TP of HK$12.3
We make no changes to FY22-24F EPS and keep FY21-24F EPS CAGR unchanged at
15%. However, we trim our target PEG for A-Living from 0.4x to 0.35x to factor in our
increased concern over the liquidity and sales performance of its parent Agile. As a
result, we lower our target CY22F P/E to 5.3x and TP to HK$12.3 accordingly. Reiterate
Hold. Key downside risks include prolonged Covid-19-related lockdowns in China.
Stronger-than-expected growth in VAS and improvement in Agile’s liquidity are key
upside risks.