Focusing on deleveraging and liquidity
? Agile does not set an official FY22F presales target but has said that it would
be satisfied with sales of Rmb100bn.
? It targets to reduce interest-bearing debt by Rmb10bn in FY22F, supported by
ongoing asset disposals (target: Rmb25bn in FY22F).
? Its offshore/onshore repayment or refinancing activities will last until Aug 22.
Reiterate Hold with a lower SOP-based TP of HK$3.3.
Management: Rmb100bn presales would be good for FY22F
We hosted a post-audited results call for Agile on 13 May. Its financial statements have
been audited by PwC which issued an unqualified opinion. In 4M22, it achieved presales
of Rmb25bn, down 51% yoy. Management said it has not set an official presales target
for FY22F but believes sales of Rmb100bn in FY22F (backed by Rmb200bn saleable
resources) would be satisfactory in the current environment. As sales briefly improved
recently, management aspires to achieve Rmb45bn in presales in 1H22F. We project
presales of Rmb83bn for FY22F, down 40% yoy.
On its way to cut interest-bearing debt further
Agile had c.Rmb30bn cash at end-Mar 22 based on management’s estimates, consisting
of 30% restricted cash (mostly locked in escrow accounts and collected from presales)
and 70% unrestricted cash. It aims to cut gross interest-bearing debt by a further
Rmb10bn in FY22F, partially supported by its plan to dispose of assets worth c.Rmb25bn
which include both property projects and environmental protection (EP) plants. As of 12
May, c.Rmb16bn worth of assets have been secured for disposal and c.Rmb10bn sales
proceeds have been collected, according to management.
Repayment/refinancing activities will last until Aug 22
Agile has two offshore syndicated loans due soon: the repayment of one syndicated loan
of HK$2.8bn will be ready in two weeks, while it is arranging to refinance or extend
another loan due in Jul 22. It would also repay or refinance US$600m senior notes due in
Aug 22, after which it would have little offshore debt to repay for the rest of 2022F.
Meanwhile, management disclosed at the call that it is applying for a quota to refinance
Rmb1.5bn onshore public debt due in Jul 22.
Reiterate Hold with a lower TP of HK$3.3
We cut FY22-24F EPS by 4-6% for lower overall gross profit margin (22-23%) and thus
lower our SOP-based TP by 30% to HK$3.3, consisting of HK$2.3 for value from property
development (for which we apply a 70% discount to NAV) and HK$1.0 from its stake in ALiving (for which we apply a 60% discount to market price). We widen both discount
assumptions by 10% pts to price in Agile’s higher liquidity risk but reiterate a Hold rating
as we see limited near-term positive catalysts until its liquidity improves. Key upside risk:
higher-than-expected contracted sales. Key downside risk: failing to refinance its debts
and downgrades by credit rating agencies.