Zhongnan Construction (000961) Quarterly Report Comment: Expected Rapid Growth and Expansion of Further Expansion

Zhongnan Construction (000961) Quarterly Report Comment: Expected Rapid Growth and Expansion of Further Expansion

Core Views The third quarterly report on October 28 shows that the company’s operating income for the first three quarters was 409.

600 million, +36 in ten years.

5%; net profit to mother 22.

6 trillion, +78 a year.

7%; EPS0.

61 yuan.

Among them, net profit attributable to mothers was achieved in the third quarter9.

5.2 billion, previously + 180%.

The performance was close to the upper limit of the forecast, and the rhythm of performance release gradually accelerated, in line with expectations.

Taking into account the high proportion of carry-over in the fourth quarter results, it still maintains EPS 1 in 2019-2021.

08, 1.

90, 2.

46 yuan profit forecast, maintain “Buy” rating.

The performance has grown rapidly, and sales have steadily increased to 18-20 million yuan in the first three quarters of growth. The core lies in: 1) the proportion of consolidated internal settlement equity has increased, and the proportion of minority shareholders has decreased by 3% from 18% in the same period last year;) The settlement volume of non-consolidated caliber projects increased significantly, and the investment income reached 3.

7.4 billion, previously + 356%.

Reported total real estate settlement amount 284.

600 million, +28 a year.

6%, gross profit margin of real estate business 23.

5%, rising by 0 every year.


At the end of the reporting period, the company’s unsold amount under the consolidated statement amounted to 1,278.

800 million, equivalent to 310% of 18 years of revenue, laying the foundation for future performance growth.

From January to September 2019, the company’s land business achieved sales of 130 billion U.S. dollars, an annual increase of + 27%. The sales growth rate is higher than the industry average. Since September, the sales enthusiasm has continued and the delivery scale has accelerated. We believe that the company’s scale sales will reach 1800-2000 trillion progress steadily.

The intensity of investment in land acquisition has not diminished, and the focus on core urban agglomeration strategies and the main residential industry continues. According to the three quarterly report, the company’s new investment amount from January to September was 415.

900 million, +42 a year.

6%; investment intensity (land acquisition amount / sales amount) increased by 4 percentage points to 32%; investment intensity is not reduced, continue to focus on the core city group strategy, layout optimization continues to accelerate the realization of high-quality resources.

At present, the company’s construction area under construction totals 47.55 million square meters. Based on the average sales price and the unsold stacks on the consolidated table, it is currently available for sale at about 30 million square meters.

At the same time, the company transferred the Suzhou South-South Center project to Zhongnan Holdings to further focus on the main residential business, and it is expected to thicken the company2.

Investment income of 460,000 yuan.

15.On the basis of the end of last year, it dropped further by 15.

9pct to 175.

At the same time, the debt structure has also been optimized. The proportion of short-term debt has been replaced by 31% at the end of last year.

21%, cash coverage multiples from 1 at the end of last year.

13 rose to 1.

59 times.

On September 27, it was approved to issue 2.7 billion corporate bonds. Since the second quarter, the financing environment has continued to be high. The company’s initiative to improve its leverage and rapid payment recovery have created better conditions for future sustainable development.

Equity incentives are overweight, scale expansion, and “Buy” rating maintained. Following July last year, the company plans to grant a total share capital of 3 to 486 people in May 2019.
73% of budget incentives are advanced in depth around middle management.
The company’s short-term and medium-term focus is on high-speed sales growth, steady increase in land acquisition, steady decline in debt ratio, and abundant stock settlement resources to drive high performance growth. The long-term focus is on professional managers to improve corporate governance and high standard fair incentives to promote management dividends.

The EPS for 2019-2021 is maintained at 1.

08, 1.

90, 2.

46 yuan profit forecast.

Refer to comparable companies for June 2019.

With a 9x PE estimate, the company is in a period of rapid expansion. We believe that a 重庆耍耍网 reasonable PE in 2019 is 10-11x and the target price is 10.


88 yuan, maintain “Buy” rating.

Risk warning: sales growth budget risk; tighter financing, capital deposits increase the pressure on the capital chain.