Gemdale Group (600383) September 2019 Monthly Commentary: Layout of High-Energy Cities Moderately Raising Leverage

Gemdale Group (600383) September 2019 Monthly Commentary: Layout of High-Energy Cities Moderately Raising Leverage
Core Views The company fully benefits from industry changes.The layout focuses on first- and second-tier cities, with strong sales certainty.At the same time, the company has a credit advantage and the property management platform is also valuable.   Sales growth continued to lead the industry.In September, the company’s sales growth further improved.The monthly sales amount is 250.100 million, +38 a year.69%, sales area is 135.20,000 square meters, +46 per year.68%; from January to September, the cumulative sales amount was 1418.4 trillion, +33 a year.70%; cumulative sales area is 710.30,000 square meters, +22 per year.44%.The company’s sales growth continued to lead the leader.   The layout and capabilities are excellent, optimistic about the subsequent sales growth.We noticed that the sales growth rate of leading companies in the first nine months was significantly positively correlated with the average selling price, and the sales certainty ratio in high-tier cities.The city layout of the company is relatively high, benefiting from market changes.The company also actively promoted the market to expand sales results.We are optimistic about the maintenance and improvement of the company’s subsequent sales growth.   Take the ground steadily, without game cycles.The company’s land investment in September was 517.800 million, expanding the land reserve area of 7.14 million square meters, mainly concentrated in first-tier and second-tier cities.The company’s land acquisition was stable in the third quarter, and it has maintained the rhythm of “selling one for one” since 2018 (sales area / new area: 2018: 877.淡水桑拿网8/878.2, 2019Q3: 710.2/714.7) Under the circumstance of controlling risks, it also guarantees the company’s continuous development and the project will not be blocked.   Low capital cost and moderately increased leverage.The company scale proactively expanded, driving the net debt ratio from 78% at the end of 2016 to June 2019.0%.However, the company’s credit history is good.Under the background of broader industry credit spreads, the company’s credit spreads have been further reduced, and it has gained a relative value in operating advantages.   Risk factors: Inadequate profitability of the company’s new projects and the risk of the company’s equity ratio continuing to decline.   Blue chip companies that have fully benefited from the changes in the industry and enjoyed steady growth.The company plans to focus on first-tier and second-tier cities. It is expected that sales will have a high degree of certainty and future performance growth can be expected.In addition, the company has the lowest capital cost, the product has a certain premium capability, and the property management platform also has a certain value.We maintain the company’s EPS forecast for 2019/20/212.07/2.28/2.49 yuan / share, maintaining 14.The target price of 46 yuan / share corresponds to a 7x estimate and the company’s “buy” investment rating.