Morningstar

Morningstar, Inc.

Equity Bottom-Up

Shimao’s sales performance outshone most of the sector peers during 2018. The company achieved contract sales growth of 75%. With the strong momentum and the expansion of its operation, we expect the company to book strong earnings growth for 2018 and 2019 with steady margin. However, as the property market is near the tail end of a growth cycle, along with the company's relative high gearing level, we expect the company to revert to a slow pace of growth after 2019. Increasing contributions…

Shimao reported interim 2018 results was in line with our estimate. Revenue and core attributable profit were CNY 43 billion and CNY 4.4 billion, respectively, up 19% and 20% year on year. Gross margin improved to 31% from 30% as expected. Earnings per share were CNY 1.266, up 10% year on year. The company declared an interim dividend of HKD 0.50 per share, up 25% year on year. The top line and core earnings accounted for 49% and 48% of our projection, the run rate is about the same as that seen…

We are upgrading our fair value estimate for Shimao Property to HKD 25 per share from HKD 22 as a result of the company's strong sales year to date. The sales performance has outpaced most of the sector peers. We still believe the property market is near the tail end of a growth cycle, but given Shimao's sales momentum as well as the expansion of its operational scale, we expect the company to book strong earnings growth over the next two to three years. Our updated fair value estimate is 8…

Shimao reported full-year 2017 results that were slightly below our estimate. Revenue and core attributable profit were CNY 70 billion and CNY 6.9 billion, respectively, up 19% and 11% year on year. Gross margin improved from 28% to 30% as expected. Earnings per share were CNY 2.32, up 55% year on year. The company declared an annual dividend of CNY 1 per share, up 32% year on year. The top line was 3% above our estimate, and core earnings were 4% below due to higher earnings attributable to…

Hong Kong

Shimao Property Holdings Limited develops real estate projects in China.

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