报告名称：China Overseas Land& Inv.(00688.HK)1Q results in line; better margins in 2-4
报告类型：港股研究
报告日期：2016-04-20
研究机构：招商证券香港
股票名称：中国海外发展
股票代码：00688
页数：7
简介：COLI reported 1Q16 operating profit +4% YoY (+12.5% compared to non-restated 1Q15 number) to HK$7.1bn; operating margin at 29%, in line with our full-year estimate
We expect 1) better margins and higher profit growth in 2-4Q; and 2) contracted sales pickup in 2Q. We upgrade rating to BUY with TP of HK$28.2 unchanged
2Qmarginsand contracted salesto surprise
1Q16 project booking was mostly related to projects pre-sold in 2014 and early 2015. In the coming three quarters, there will be room for margin improvementsthanks to home price increase from mid-2015 onwards.In FY16E, we expect its GPM to rebound by 3.4ppts YoY to 32%. Regarding contracted sales, COLImade only 25% YoY growth vs the sector's 75% in 1Q16. The slower growth is mainly because COLI had fewer saleable resources in 1Q while itspeers generally grew from a low-base. In 2Q, COLIwould have more new projects toboost the contracted sales.For the full-year, we estimate COLI to achieve10% YoY contracted sales growth vs the sectorof7%. We estimate COLI's FY16E core profit to grow 19%thanks to margin increase and higher JV profits. Our FY16E earnings forecastis 6% belowBloomberg consensus.
Competitive land purchase strategy
We are positive on COLI as it has started accumulating more residential land sites transformed from old industrial land sites. These sites are characterized with 1) sizeable GFA over 1mn sqm, 2) Site location at city areas and 3) relatively cheaper land cost. Examples include Guangzhou Liwan project (over 1mn sqm GFA) and Beijing Shijingshan project (phase I at 1.4mn sqm GFA). As at the end of 1Q16, it had HK$99.5bn gross cash and only 8% net gearing (FY15 year-end: 7%). We estimate that its net gearing will rise to 23% if it acquires CITIC property assets. That said, COLI has room to acquire more new land sites during the year.
Upgrade to BUY
We like COLI's major-city focused landbanks and competitive new land purchase strategy. We are also positive on its contracted sales and margin improvements in the coming quarters. We upgrade COLI to BUY and keep TP at HK$28.2, based on 10% discount to 1-year forward NAV, a premium against its large peers' 26% discount.

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