Beijing Capital Land (2868, $6.63) 12M Target $8.8 Trading BUY
Interim net profit of Beijing Capital Land rose 17% yoy to RMB102mn in 1H07. Revenue grew 99% yoy to RMB354mn largely due to a 64% increase in property sales revenue.
Up to this September, BCL has acquired three parcels of land with total GFA of 2.59mn sq.m from Tianjin, Chengdu and Shenyang, with an average land cost of approximately RMB1,300 per sq.m gross. We expect the company to buy more land in the coming months and expand its portfolio of land bank to 8.0m sqm GFA at the end of 2007 that should be sufficient for consumption over the next three years.
Proposed issue of A shares will be a share price catalyst that will strength the company’s balance sheet and enable it to speed up acquisition of land.
Co-operation with Singapore-based GIC to commence property development business will enable the company to speed up the pace of property development, acquire more land and reduce financing risk.
The long-term incentive fund scheme also can drive management to pursue higher turnover and net profit.
We forecast the company’s sales volume to grow at a CAGR of about 25% between 2007 and 2009.
Traded at 14.2x PER of 2007, we think valuation of Beijing Capital Land is attractive. We recommend a BUY with a 12-month target price of $8.80, representing 13.5x PER of 2008 and equivalent to our estimated NAV of $8.80.
Interim net profit of Beijing Capital Land rose 17% yoy to RMB102mn in 1H07. Revenue grew 99% yoy to RMB354mn largely due to a 64% increase in property sales revenue.
Up to this September, BCL has acquired three parcels of land with total GFA of 2.59mn sq.m from Tianjin, Chengdu and Shenyang, with an average land cost of approximately RMB1,300 per sq.m gross. We expect the company to buy more land in the coming months and expand its portfolio of land bank to 8.0m sqm GFA at the end of 2007 that should be sufficient for consumption over the next three years.
Proposed issue of A shares will be a share price catalyst that will strength the company’s balance sheet and enable it to speed up acquisition of land.
Co-operation with Singapore-based GIC to commence property development business will enable the company to speed up the pace of property development, acquire more land and reduce financing risk.
The long-term incentive fund scheme also can drive management to pursue higher turnover and net profit.
We forecast the company’s sales volume to grow at a CAGR of about 25% between 2007 and 2009.
Traded at 14.2x PER of 2007, we think valuation of Beijing Capital Land is attractive. We recommend a BUY with a 12-month target price of $8.80, representing 13.5x PER of 2008 and equivalent to our estimated NAV of $8.80.
