Investment Overview
In the first four months of 2013, Yuexiu Property's sales have reached RMB6.4 billion, and the contracted sales area has also reached 437,000 square meters, representing an YoY increase of 45% and 17%, and accounting for 49% and 41% of the full-year contracted sales target being RMB13.2 billion and 1.07 million square meters, respectively. Since 2013, Yuexiu Property has not launched new projects available for sale, mainly relying on the sales of the originally launched projects, and centered in the Guangzhou area. A number of projects in the Guangzhou Higher Education Mega Center located in Fanyu District and Binhai Juncheng project located in Nansha District are the important promotional projects of the Company, which have achieved good sales performance.
From May, Yuexiu Property will launch new resources available for sale. Seven new markets outside Guangdong will become the source of sales growth of Yuexiu Property in 2013. In 2013, Yuexiu Property's available-for-sale resources will approximately aggregate RMB22 billion; to complete the contracted sales target being RMB13.2 billion, the Company's periodical sales rate only needs to reach 60% of the conservative target. Given the current favorable sales completion rate, we believe that Yuexiu Property should be able to exceed the annual sales target. Meanwhile, we believe that the original sales target of Yuexiu Property is somewhat conservative, and the annual sales target is expected to be raised to RMB15 billion.
As at the end of 2012, the Company's total liabilities decreased by RMB1.8 billion to RMB20.1 billion compared with the end of 2011, and the age of account receivable in the next five years will be distributed on an equal basis, among other things, the matured liabilities in 2013 will reach RMB6.83 billion, significantly lower than the matured liabilities in 2012. In addition, having benefited from the improved sales cash flow and asset structure optimization, the Company's net debt decreased to RMB13.1 billion from RMB17 billion at the end of 2011, and the Company's net debt ratio also significantly decreased to 59% from 84% at the end of 2011, showing the financial risk has been significantly reduced.
We expect that Yuexiu Property's current booked sales have reached approximately RMB16 billion, and the Company's accounting amount is expected to exceed RMB13 billion in 2013, representing a significant increase when compared to 2012. According to our estimates, the Company's operating income in 2013 will reach RMB14.2 billion, the net profit will reach RMB4.3 billion, and EPS will reach RMB0.46, equivalent to HK$0.58. We give Yuexiu Property a "Neutral" rating, and the 12-month target price is HK$2.4, which is equivalent to 4.2 times PE in 2014.
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