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2010.12.30 Agile Property (03383 HK) Expanding with Caution, Upgrade to ‘Accumulate’

2010.12.30 Agile Property (03383 HK) Expanding with Caution, Upgrade to ‘Accumulate’
  • Regions: Mainland China, Hong Kong
  • Markets:HKEx
  • Industries: Real Estate
  • Target Companies:03383 HK Agile Property

Detailed

Company Report: Agile Property (03383 HK) Dundas Deng 邓京晶
公司报告：雅居乐地产 (03383 HK)
 
Expanding with Caution, Upgrade to ‘Accumulate’
谨慎扩张，上调评级至“收集”

 

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Summary: The PBoC increased interest rates by 0.25% on 25th Dec in concern of inflation, which was the second interest hike in 2010 and confirmed that China has entered its interest hike cycle. At least two interest rate hikes and moderate credit control policies are expected in 2011. Although moderate inflation facilitates new home sales, the buyers' expectation of unilateral increase of property price would gradually change and the overdue adjustment of the property sector may come near 2012.

 

As at December 22nd, Agile's attributable land bank reached 30.77 million sq.m due to several newly acquired land parcels in 10H2. 50.2% of its land bank was located in Guangdong, and 72.8% was in Guangdong plus Hainan. The property sales for high-end commercial housing remain strong in these two provinces as continuous population inflow is predicted. Agile is positioned to ride such trend with its relatively low average land cost at RMB 1,655 per sq.m, its local brand advantage, and its cautious strategy to focus on land acquisitions in areas, in which the company’s projects are well-established.
 
Agile's net gearing ratio would stay below 60.0% and is relatively healthier than its competitors with similar size in 2011.
 
The company is expanding its position in high-end properties with caution and is relatively less affected by the property price control policies. We expect moderate increase of its ASP and sales volume in 1H11 and the accumulated demand of housing would still be released periodically. Upgrade to ‘Accumulate’, TP revised upwards from HK$10.00 to HK$12.50, which is equivalent to 8.2x 11PE, 1.8x 11PB, and 12.1% discount to its 11NAV. Risk factor: excessive tightening.

TAG:  MIG Report Agile Property Real Estate
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