Sunshine City (000671) dynamic review report: continued to benefit from the recovery of fundamentals in first- and second-tier cities

Sunshine City (000671) dynamic review report: continued to benefit from the recovery of fundamentals in first- and second-tier cities
Investment points Sales achieved rapid growth by leaps and bounds, and the industry ranking continued to rise.From 2013 to 2018, Sunshine City achieved a leaping growth in sales revenue from 220 杭州桑拿 trillion to 1,628 trillion, with a compound annual growth rate of nearly 40%, and the industry sales ranking also increased from 29 in 2013 to 14.For the whole of 2018, the company realized sales revenue of 1628.60,000 yuan, an increase of 77 in ten years.9%; realized sales area of 1266.40,000 square meters, an increase of 92 in ten years.1%; average sales price is 12860 yuan / square meter.In January 2019, the company achieved sales revenue of 118.1 ppm, an increase of 33 in ten years.4%; realized sales area of 103.430,000 square meters, an annual increase of 45.5%. Multi-channel land acquisition, focusing on core first- and second-tier cities.From 2015 to 2017, the company increased its efforts to acquire land and acquired a large amount of land resources through mergers and acquisitions.The amount of land taken from 2015 to 2017 was 13.4 billion, 28.1 billion, and 98.6 billion, respectively, which increased by 265%, 108%, and 250 respectively.8%, the proportion of land acquisition amount to sales amount reached 45%, 57% and 107%.In 2018, the company appropriately reduced its efforts to maintain land and remained relatively cautious.The initial land acquisition amount was 409 trillion, and the proportion of sales amount to land acquisition amount dropped to 25.11%.The company’s land allocation adheres to the strategy of “regional focus, deep cultivation and development”, and cultivates core first-tier and second-tier cities.According to the energy level of the city, in 2015-2017, the proportion of the first and second-tier cities in the company’s land acquisition amounted to 90%, 95%, and 78%, respectively.In 2018, the company’s first-tier cities accounted for 4% of land acquisition, second-tier cities accounted for 60%, and third- and fourth-tier cities accounted for 36% (based on the amount of land acquisition). The soil reserves are rich, and the first and second lines account for more.As of the 2018 Interim Report, the company’s gradual land reserve was 4,267.540,000 square meters, based on the company’s 2018 average sales price of 12860 yuan / square meter, the company’s total value of 548.8 billion yuan.In terms of city energy levels, the soil storage ratio in the first and second tier cities reached 66%, and the soil storage ratio in the third and fourth tier cities reached 34%. The second shareholder’s equity problem was properly resolved and the strategic investor was dated.The 100% controlling shareholder of Shanghai Jiawen, the second shareholder of the company, Zhongmin Jiaye, transferred its 50% equity of Shanghai Jiawen to Fujian Jebsen.The second shareholder withdrew through equity transfer, and the equity issue was properly resolved.At the same time, dating “Fujian Jiecheng” as a new strategic investor optimized the company’s equity structure.After Zhu Rongbin and Wu Jianbin joined Sunshine City, the company proposed a “five-circle” development model, so that a healthy cycle of talents, land storage, and funds was realized, and the company’s rapid development was achieved. Financing margins improved and net debt ratio improved.Since 2019, monetary policy has been loose, interest rates are on the downward path, and private housing companies have seen marginal improvements in financing.The company’s most recent issue of general corporate bonds has a term of 3 years and a coupon rate of 7.5%.With the acceleration of the ground in 2018, the company’s net debt ratio also declined.As of the third quarter of 2018, the company’s net debt supplemented 207.7%, compared with 251 at the end of 2017.9% dropped 44.2 units. Investment suggestion: The sales of Sunshine City have achieved leaping growth in the past few years, and the industry ranking has continued to improve.Focusing on the core first and second tiers, the land reserve is rich in resources.The company benefited from the recovery of the fundamentals of the first- and second-tier cities and the marginal relaxation of the financing environment, and the future sustainable growth is expected.We expect the company’s EPS for 2018-2019 to be 0.74, 1.00, according to the closing price on March 1, 2019, the corresponding PE is 9 respectively.43 times and 6.98 times, maintaining the level of “prudent overweight”. Risk Warning: Significant tightening of monetary policy; industry sales fall short of expectations.