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China Vanke Co Ltd Class H 02202

Morningstar Rating
HKD 5.30 +0.11 (2.12%)
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Company Report

China Real Estate: Policy Easing Upbeat but Uncertainties Remain, We Prefer State-Owned Names

We view the recent favorable measures for the China real estate sector, including the scrapping of buying curbs in wealthy cities and the unwinding of the mortgage rates floor, as encouraging to homebuyers and investors. That said, we caution that potential buyers may remain on the sidelines amid falling home prices, and policy tailwinds will likely require a longer time to translate into a pickup in home sales. Additionally, although the CNY 500 billion in loans—backed by a relending facility from China’s central bank—to local state-owned enterprises for converting completed but unsold properties to affordable units should help clear excess inventory, execution risks remain, in our view. While the policy-induced rally has reflected the market sentiment shift, we maintain the valuations of stocks under our coverage, given industry fundamentals that are still weak. Despite a more demanding sector valuation, we think shares of state-owned developers such as China Overseas Land & Investment and China Resources Land remain attractive. We continue to prefer both names, given their more resilient contracted sales and better financial strength.

Price vs Fair Value

02202 is trading within a range we consider fairly valued.
Price
HKD 5.30
Fair Value
HKD 92.00
Uncertainty
Very High
1-Star Price
HKD 74.90
5-Star Price
HKD 7.00
Economic Moat
Kqvh
Capital Allocation
Zqydjlcp

Bulls Say, Bears Say

Bulls

Vanke’s focus on higher-tier cities could translate to stronger sales as housing demand in wealthy areas may prove more resilient amid policy easing.

Bears

A more structural economic slowdown with declining population of China may further compress Vanke’s long-run sales prospect.

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News

Trading Information

Previous Close Price
HKD 5.19
Day Range
HKD 5.145.56
52-Week Range
HKD 3.6311.46
Bid/Ask
HKD 5.30 / HKD 5.31
Market Cap
HKD 63.23 Bil
Volume/Avg
68.7 Mil / 95.2 Mil

Key Statistics

Price/Earnings (Normalized)
7.19
Price/Sales
0.13
Dividend Yield (Trailing)
13.94%
Dividend Yield (Forward)
13.94%
Total Yield
13.94%

Company Profile

China Vanke is a large real estate developer in China with residential property sales among the top three of all peers through the past five years. While property development accounts for most of its revenue and earnings, it has expanded its business presence in investment properties such as commercial retail complexes, long-term leasing apartments, and leasable logistical assets. China Vanke also owns an over-60% equity interest in its property management division Onewo, which manages the second-largest gross floor area in China. It is dual-listed in Shenzhen and Hong Kong, and state-owned Shenzhen Metro is the largest shareholder with a 27.2% stake.
Sector
Real Estate
Industry
Real Estate - Development
Stock Style Box
Large Value
Total Number of Employees
131,097

Competitors

Valuation

Metric
02202
00688
00817
Price/Earnings (Normalized)
7.196.43
Price/Book Value
0.230.380.21
Price/Sales
0.130.710.11
Price/Cash Flow
14.54
Price/Earnings
02202
00688
00817

Financial Strength

Metric
02202
00688
00817
Quick Ratio
0.450.450.54
Current Ratio
1.382.291.06
Interest Coverage
5.9140.83−0.56
Quick Ratio
02202
00688
00817

Profitability

Metric
02202
00688
00817
Return on Assets (Normalized)
0.46%2.57%−0.44%
Return on Equity (Normalized)
2.99%6.50%−4.19%
Return on Invested Capital (Normalized)
1.15%3.78%−0.39%
Return on Assets
02202
00688
00817
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Real Estate - Development Industry Comparables

1-Day Chart
Name
Price
Morningstar Rating for Stocks
Capital Allocation
Economic Moat
Market Cap
Sun Hung Kai Properties Ltd
SUHJF
Dyzl$26.6 Bil
Sun Hung Kai Properties Ltd ADR
SUHJY
Vygh$26.6 Bil
China Resources Land Ltd
CRBJF
Wltz$24.7 Bil
China Resources Land Ltd ADR
CRBJY
Twmg$24.7 Bil
China Overseas Land & Investment Ltd ADR
CAOVY
Mtq$20.3 Bil
China Overseas Land & Investment Ltd
CAOVF
Pgkl$20.3 Bil
Daiwa House Industry Co Ltd
DWAHF
Ggsc$16.7 Bil
Daiwa House Industry Co Ltd ADR
DWAHY
Ysth$16.7 Bil
CK Asset Holdings Ltd ADR
CNGKY
Pvssmb$13.2 Bil
CK Asset Holdings Ltd
CHKGF
Mtxzxdr$13.2 Bil

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