Latest from Citi on SZNTF:
Shenzhen Investment (0604.HK)
Buy: Entering a New Growth Phase; Still Cheap at 26% Discount
* Reiterate Buy/Low Risk — Our new target price is HK$7.35, on our forward-08E
NAV. Our target price and 07E dividend yield imply a total return of 39% for
next 12 months. SZI is still trading at a valuation discount versus other Chinese
developers. It has essentially completed its disposal of non-property assets, and
so should now be looked upon and valued as a pure China property play.
* Expanding landbank driving growth — With the capital from the disposal of its
non-property assets, SZI has started its 2nd restructuring step – expanding its
property development business. YTD, SZI has acquired 4msm of new landbank.
As of now, excluding the landbank of Coastal Greenland and Road King
Infrastructure, the landbank of SZI already stands at about 7msm.
* Faster asset turnover — At the same time as its building up its development
landbank, SZI is also expanding its annual production volume. For 2007, it is
completing an attributable GFA of 0.39msm, up 204% YoY. For 2008, SZI is
completing 0.83msm, up another 112% YoY. These should lead to higher
earnings growth, in addition to a faster asset turnover.
* Enhancing its investment properties — SZI is now planning an overhaul of its
investment properties portfolio. The bulk of the properties are located in the two
prime districts in Shenzhen: Luohu and Futian, and so are sitting on handsome
land value appreciation. Given the tight land supply in the two areas and rising
land costs, these buildings offer value-enhancing redevelopment opportunities. |
