China Overseas Grand Oceans Group Ltd. (0081.HK / 81 HK)

Transcription

1 Asia Pacific/China Equity Research Real Estate Rating OUTPERFORM* [V] Price (9 Aug 13, HK$) 9.87 Target price (HK$) 1.3¹ Upside/downside (%) 4.6 Mkt cap (HK$ mn),56 (US$,95) Enterprise value (HK$ mn) 3,996 Number of shares (mn),8.4 Free float (%) week price range ADTO 6M (US$ mn) 5.5 *Stock ratings are relative to the coverage universe in each analyst's or each team's respective sector. ¹Target price is for 1 months. [V] = Stock considered volatile (see Disclosure Appendix). Share price performance Research Analysts Duo Chen duo.chen@creditsuisse.com Jinsong Du jinsong.du@creditsuisse.com Price (LHS) Rebased Rel (RHS) 15 5 Aug11 Dec11 Apr1 Aug1 Dec1 Apr The price relative chart measures performance against the HANG SENG INDEX which closed at on 9/8/13 On 9/8/13 the spot exchange rate was HK$7.75/US$1 Performance Over 1M 3M 1M Absolute (%) Relative (%) China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) INITIATION To answer the three key questions on COGO Initiate coverage with OUTPERFORM. We initiate coverage on COGO with an OUTPERFORM rating and HK$1.3 target price. COGO offers high growth, strong financials, SOE background, and experienced management at 8% discount to NAV, compared to 1% discount to NAV for COLI. How does COGO play Tier 3 cities differently? COGO was acquired by COLI in, and later became COLI s tier 3 cities' property development flagship. Different from other tier 3 cities players, COGO: (1) focuses on the most developed tier 3 cities with stronger GDP (38% higher than Evergrande and 59% higher than Country Garden), income, FAI and population inflows, etc.; and () focuses in city centres rather than outskirts, with projects on average within 9 km from city centres, compared to 17 km for Evergrande and 3 km for Country Garden. What sales growth to expect? Our detailed analysis on COGO s existing project and future pipeline shows that: (1) COGO s YTD sales went up 38% YoY after stripping out the oneoff commercial project disposal in April 1; () H13E sales should be even stronger with 7% of full year s new saleable resources; (3) 13E sales can grow by 66% YoY (exclude project disposal in 1), followed by over 3% annual growth in 14E and 15E. What margins to expect? Our projectbyproject analysis shows that COGO has on average raised ASP by 11% per annum for each project since launch, much higher than the cities average of 4%. We believe its strong pricing power and superior cost control will protect margin downside and support longterm gross margin to stay around 35%. Valuation and catalysts. Our target price of HK$1.3 is based on 15% discount to 13E NAV. Nearterm catalysts include two new land acquisitions just announced to add NAV, strong H13E contracted sales, and possible shareholding increase by its parent company COLI. Investment risks include execution risks in entering new cities, and geographical restrictions that may limit longterm growth. Financial and valuation metrics Year 1/1A 1/13E 1/14E 1/15E Revenue (HK$ mn) 9, ,97.7 1,9.5 6,735.1 EBITDA (HK$ mn) 3,47. 5, , ,4.3 EBIT (HK$ mn) 3,47. 5, , ,4.3 Net profit (HK$ mn), ,4.8 3, ,813.3 EPS (CS adj.) (HK$) Change from previous EPS (%) n.a. Consensus EPS (HK$) n.a EPS growth (%) P/E (x) Dividend yield (%) EV/EBITDA (x) P/B (x) ROE (%) Net debt/equity (%) net cash Source: Company data, Thomson Reuters, Credit Suisse estimates. DISCLOSURE APPENDIX CONTAINS ANALYST CERTIFICATIONS AND THE STATUS OF NON US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. CREDIT SUISSE SECURITIES RESEARCH & ANALYTICS BEYOND INFORMATION ClientDriven Solutions, Insights, and Access

2 1/1/ 3/1/ 5/1/ 7/1/ 9/1/ 11/1/ 1/1/11 3/1/11 5/1/11 7/1/11 9/1/11 11/1/11 1/1/1 3/1/1 5/1/1 7/1/1 9/1/1 11/1/1 1/1/13 3/1/13 5/1/13 7/1/13 1 August 13 Focus charts Figure 1: COGO plays in more developed tier 3 cities with stronger GDP, income, FAI, and population inflows (COGO=) COGO Country Garden Evergrande Figure : Projects' average distance from city centre: COGO chooses city centres rather than outskirts (km) GDP GDP per capita Income per capita FAI Population inflows Note: population inflow =(permanent population registered population)/registered population Source: CEIC, Company data, Credit Suisse estimates COGO Evergrande Country Garden Source: Company data, Soufun, Google map, Credit Suisse estimates Figure 3: H13E sales may surge with 7% of full year s new saleable resources (HK$ bn) % of full year's new saleable resources are scheduled in H13E Carried over from 1 Newly added in 1H13 To be add in H13E 15.5 Figure 4: 13E sales can grow by 66% YoY, followed by over 3% annual growth in 14E and 15E (HK$ mn) Contracted sales Number of proejcts on sale (RHS) 35, , 4 4 5, 35 33, , 17 31,688 4,375, 18, , 5 11,68 4,1 7,687 5 A 11A 1A 13E 14E 15E Note: 1 contracted sales exclude oneoff sales from disposing a commercial project in April 1. Figure 5: COGO s longterm gross margin can stay around 35% (%) 1A 15E Figure 6: Quality new land acquisitions used to drive share price in the past; two new land acquisitions just announced to support nearterm share price performance 5% 4% 3% % % % % Source: Company data, I/B/E/S consensus, Credit Suisse estimates Source: Company data, the BLOOMBERG PROFESSIONAL service, Credit Suisse estimates China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK)

3 To answer the three key questions on COGO COGO was acquired by COLI in and later became COLI s tier 3 cities property development flagship. It offers high growth, strong financials, SOE background, and experienced management at 8% discount to NAV, compared to 1% discount to NAV for COLI. How does COGO play tier 3 cities differently? Many investors think COGO is similar to Evergrande and Country Garden as a tier 3 city player. However, our proprietary projectbyproject analysis shows that COGO has a much better land bank quality: (1) COGO chooses the most developed tier 3 cities with stronger GDP (38% higher than Country Garden and 59% higher than Evergrande), GDP per capita, disposable income per capita, FAI, and population inflows, etc. () COGO chooses city centres rather than outskirts. Its projects are on average within 9 km from city centres, compared to 17 km for Evergrande and 3 km for Country Garden. What sales growth to expect? Our detailed analysis on COGO s existing project and future pipeline shows that: (1) COGO s YTD sales were up 38% YoY after stripping out the oneoff commercial project disposal in April 1; () H13E sales should be even stronger with 7% of full year s new saleable resources (8% in 1H13) and 67 brand new projects launches (only 1 in 1H13); (3) 13E sales can grow by 66% YoY (stripping out the oneoff commercial project disposal in April 1), followed by over 3% annual growth in 14E and 15E. What margins to expect? Our project by project analysis shows that COGO on average raised ASP by 11% per annual for each project since launch, much higher than the cities average of 4%, implying strong pricing power. COGO also shows clear competitive advantages on cost savings: (1) land cost is only 16% of 1 contracted sales ASP; () construction cost enjoys % savings on materials due to centralized purchase by its parent company China State Construction Engineering Corporation; (3) Lowest financing cost (4.7%) among mid cap peers thanks to its SOE background and active offshore financing (63%); (4) one of the lowest SG&A expenses (4%) thanks to its strong brand name. We believe its strong pricing power and outstanding cost control will protect margin downside and support longterm gross margin to stay around 35%. Valuation and catalysts We initiate coverage on COGO with an OUTPERFORM rating and a HK$1.3 target price, based on 15% discount to 13E NAV. Nearterm catalysts include: (1) two new land acquisitions just announced to add NAV; () contracted sales that may surge in H13E supported by 7% of fullyear s new saleable resources; (3) possible shareholding increase by its parent company COLI. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 3

4 Financial summary China Overseas Grand Oceans Group Ltd. 81.HK / 81 HK Price (9 Aug 13): HK$9.87, Rating:: OUTPERFORM [V], Target Price: HK$1.3, Analyst: Duo Chen Target price scenario Scenario TP %Up/Dwn Assumptions Upside Central Case Downside Income statement (HK$ mn) 1/1A 1/13E 1/14E 1/15E Sales revenue 9,717 16,98 1,9 6,735 Cost of goods sold 5,779,473 13,739 17,333 SG&A ,16 1,319 Other operating exp./(inc.) (53.3) (115.7) (.) (11.) EBITDA 3,47 5,156 6,557 8,4 Depreciation & amortisation EBIT 3,47 5,156 6,557 8,4 Net interest expense/(inc.) Nonoperating inc./(exp.) Associates/JV Recurring PBT 3,47 5,147 6,545 8,189 Exceptionals/extraordinaries Taxes 1,9 1,9,4 3,38 Profit after tax,198 3,5 4,13 5,151 Other after tax income Minority interests Preferred dividends Reported net profit,113 3,5 3,863 4,813 Analyst adjustments Net profit (Credit Suisse),113 3,5 3,863 4,813 Cash flow (HK$ mn) 1/1A 1/13E 1/14E 1/15E EBIT 3,47 5,156 6,557 8,4 Net interest Tax paid (1,597) (777) (1,19) (1,461) Working capital (5) (5,65) (4,98) (5,38) Other cash & noncash items (4.7).4 (.1) (1.9) Operating cash flow 1,67 (886) 1,41 1,359 Capex Free cash flow to the firm 1,67 (886) 1,41 1,359 Disposals of fixed assets Acquisitions Divestments 4. Associate investments Other investment/(outflows) (1,6) (1,653) (1,736) (,67) Investing cash flow (1,) (1,653) (1,736) (,67) Equity raised Dividends paid (19.) (88.) (344.4) (433.8) Net borrowings 3,645 1,9 1,57,43 Other financing cash flow 44.8 Financing cash flow 3,7 91 1,7 1,69 Total cash flow 3,948 (1,617) Adjustments 13.4 Net change in cash 3,961 (1,617) Balance sheet (HK$ mn) 1/1A 1/13E 1/14E 1/15E Cash & cash equivalents 7,83 6,896 8,175 9,853 Current receivables,793 3,88 5,6 6,55 Inventories 17,53 6,311 34,311 44,54 Other current assets Current assets 8,6 37,85 47,765 61,48 Property, plant & equip Investments,38 3,36 4,19 5,439 Intangibles Other noncurrent assets Total assets 3,945 41,8 5,577 67,483 Accounts payable 4,35 5,68 7,61 9,46 Shortterm debt,53,853 3,694 4,795 Current provisions 1,84,56 3,315 4,33 Other current liabilities 7,86,94 14,145 18,363 Current liabilities 15,789 1,945 8,414 36,887 Longterm debt 5,5 5,514 6,44 7,186 Noncurrent provisions 1,441,4,594 3,368 Other noncurrent liab. Total liabilities,335 9,46 37,53 47,441 Shareholders' equity 7,966,73 14, 18,61 Minority interests ,3 1,441 Total liabilities & equity 3,945 41,8 5,577 67,483 Key earnings drivers 1/1A 1/13E 1/14E 1/15E Contracted sales target Contracted sales (HKD mn) Contracted GFA ( sqm) Contracted ASP (HKD/sqm) Recognized sales (HKD mn) Per share data 1/1A 1/13E 1/14E 1/15E Shares (wtd avg.) (mn),488,488,488,488 EPS (Credit Suisse) (HK$) DPS (HK$) BVPS (HK$) Operating CFPS (HK$).51 (.36).4.55 Key ratios and 1/1A 1/13E 1/14E 1/15E valuation Growth(%) Sales revenue EBIT Net profit EPS Margins (%) EBITDA EBIT Pretax profit Net profit Valuation metrics (x) P/E P/B Dividend yield (%) P/CF 19.4 (7.7) EV/sales EV/EBITDA EV/EBIT ROE analysis (%) ROE ROIC Asset turnover (x) Interest burden (x) Tax burden (x) Financial leverage (x) Credit ratios Net debt/equity (%) (7.5) Net debt/ebitda (x) (.19) Interest cover (x) Source: Company data, Thomson Reuters, Credit Suisse estimates. 1MF P/E multiple Source: IBES 1MF P/B multiple China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 4

5 How does COGO play tier 3 cities differently? Many investors think COGO is similar to Evergrande and Country Garden as tier 3 cities players. However, our proprietary project by project analysis shows that COGO has much better land bank quality: (1) COGO chooses the most developed tier 3 cities with stronger GDP (38% higher than Country Garden and 59% higher than Evergrande), GDP per capita, disposable income per capita, FAI, and population inflows, etc. () COGO chooses city centres rather than outskirts. Its projects are on average within 9 km from city centres, compared to 17 km for Evergrande and 3 km for Country Garden. Figure 7: COGO land bank by the end of July 13 5 projects in 13 cities with total GFA of.6 mn sq m Hohhot Royal East Hohhot The Arch Hohhot Dragon Cove Hohhot The Bund Hohhot Xing an South Road Project Hohhot Hubilie Road Project Jilin Royal Waterfront Jilin Royal East Jilin International Community Yinchuan International Community Beijing Lagoon Manor Beijing Tonghui River Project Yancheng Juheng Road Project Lanzhou The Arch Changzhou Dinosaurs Land Project Changzhou Fenghuang Road Project Yangzhou Jade Garden Nantong Gangzha District The R13 Block Hefei The Great Hill Hefei Maison du Lac Hefei Nanning Road Project Ganzhou International Community Guilin The Chief Palace Nanning The Green Peak Nanning New and HiTech Industrial Development Zone Project Source: Company data Some tier 3 cities under COGO s definition can be classified as tier cities by the market There has never been an official and standard definition of city tiering in China. We believe COGO s definition is the strictest: (1) 4 tier 1 cities (Beijing, Shanghai, Guangzhou, Shenzhen); () 5 tier cities; (3) tier 3 cities; (4) all the other 134 prefecturelevel cities are defined as tier 4 or lower tier cities. Hence, some tier 3 cities under COGO s definition can be classified as tier cities by the market. Therefore, we believe COGO should not be perceived as just a normal tier 3 city China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 5

6 player like Country Garden or Evergrande. Our proprietary project by project analysis shows that COGO has much better land bank quality than the other two. Figure 8: COLI s definition of city tiering 4 tier 1 cites, 5 tier cities, and tier 3 cities Source: Company data Play in the most developed tier 3 cities The best way to play China s urbanisation theme is to invest in massmarket developers with exposure to more developed cities Based on our report Unconventional stock ideas on urbanisation on 15 March 13, more developed cities attract more population because of better education and job opportunities, better infrastructure, and better welfare facilities, etc. Our analysis shows that the best way to play China s urbanisation theme is to invest in massmarket developers with exposure to more developed cities. COGO chooses the most developed tier 3 city with stronger GDP, GDP per capita, disposable income per capita, FAI, and population inflows, etc COGO chooses projects in the most developed tier 3 cities There are in total 657 cities in China, of which 88 are prefecture level cities. COLI, as the tier 1 and tier cities flagship, has 54 cities under its radar for land banking. COGO, as the tier 3 cities flagship property development company, has 7 cities under its radar for land banking. These 14 cities are top 19% out of 657 cities in China, and top 43% out of 88 prefecture level cities. Figure 9: Administrative structure of Chinese cities Number Cities Directly under central government 4 Beijing, Tianjin, Shanghai, Chongqing Deputy provincial level cities 15 Nanjing, Shenyang, Dalian, Xiamen, Hangzhou, Guangzhou, Shenzhen, Harbin, Jinan, Qingdao, Wuhan, Chengdu, Xian, Ningbo, Changchun Prefecture level cities 69 County level cities 369 Total 657 Source: China Statistical Yearbook 1 Each year, COGO s investment department reviews almost land banking opportunities from these 7 cities, but chooses only around projects in the end. Each project is required to have >1% IRR and >15% ROI (same standards as COLI). In the past three years, COGO has acquired projects in 1 cities, which are among the most developed cities out of the 7 cities under its radar for land banking. COGO plans to enter around two to three new cities each year but acquire more projects in existing cities to enjoy economies of scale. Therefore, we estimate COGO will enter only around cities by the end of 15. With its rigorously screening process, COGO should be able to keep its land bank only in the most developed tier 3 cities, in our view. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 6

7 Compared to Evergrande and Country Garden, COGO s land bank cities have higher GDP, GDP per capita, disposable income per capita, FAI and population inflow The average GDP of COGO s land bank cities is Rmb348 bn, much higher than Country Garden s Rmb5 bn and Evergrande s Rmb19 bn. Taking a closer look, 33% of COGO s land bank cities have GDP higher than Rmb3 bn, higher than Country Garden s 4% and Evergrande s %. Around 9% of COGO s land bank cities have GDP higher than Rmb bn, higher than Country Garden s 61% and Evergrande s 61%. Figure : Developers land bank cities average 11 GDP (Rmb bn) Landbank cities' average GDP COGO Country Garden Evergrande Source: CEIC, Company data, Credit Suisse estimates Figure 11: Percentage of land bank cities with 11 GDP>Rmb5 bn, >Rmb3 bn and >Rmb bn % 9% 8% 7% 6% 5% 4% 3% % % % 8% 18% % % of landbank cities with GDP>Rmb5 bn COGO Country Garden Evergrande 33% 4% % % of landbank cities with GDP>Rmb3 bn Source: CEIC, Company data, Credit Suisse estimates 9% 61% 61% % of landbank cities with GDP>Rmb bn The average GDP per capita of COGO s land bank cities is Rmb51,9, much higher than Country Garden s Rmb41,951 and Evergrande s Rmb41,1. Taking a closer look, 5% of COGO s land bank cities have GDP per capita that s higher than Rmb75,, higher than Country Garden s 1% and Evergrande s 14%. Around 5% of COGO s land bank cities have GDP per capita higher than Rmb5,, higher than Country Garden s 31% and Evergrande s 8%. Around 9% of COGO s land bank cities have GDP per capita higher than Rmb5,, higher than Country Garden s 67% and Evergrande s 68%. Figure 1: Developers land bank cities average 11 GDP per capita (Rmb) Landbank cities' average GDP per capita 6, 51,9 5, 41,951 41,1 4, 3,,, COGO Country Garden Evergrande Source: CEIC, Company data, Credit Suisse estimates Figure 13: Percentage of land bank cities with 11 GDP per capita >Rmb75,, >Rmb5, bn, and >Rmb5, % 9% 8% 7% 6% 5% 4% 3% % % % 5% 1% 14% % of landbank cities with GDP per capita>rmb75, COGO Country Garden Evergrande 5% 31% 8% % of landbank cities with GDP per capita>rmb5, Source: CEIC, Company data, Credit Suisse estimates 9% 67% 68% % of landbank cities with GDP per capita>rmb5, The average disposable income per capita of COGO s land bank cities is Rmb,699, higher than Country Garden s Rmb,664 and Evergrande s Rmb19,78. Further analysis reveals that 33% of COGO s land bank cities have disposable income per capita higher than Rmb5,, higher than Country Garden s 4% and Evergrande s 16%. Around 67% of COGO s land bank cities have disposable income per capita that s higher than Rmb,, higher than Country Garden s 43% and Evergrande s 39%. % of COGO s land bank cities have disposable income per capita higher than Rmb15,, higher than Country Garden s 84% and Evergrande s 8%. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 7

8 Figure 14: Developers land bank cities average 11 disposable income per capita (Rmb) Landbank cities' average income per capita 3,,5, 1,5 1,,5, 19,5 19, 18,5 18,,699,664 19,78 COGO Country Garden Evergrande Source: CEIC, Company data, Credit Suisse estimates Figure 15: Percentage of land bank cities with 11 disposable income per capita >Rmb5,, >Rmb,, >Rmb15, % 9% 8% 7% 6% 5% 4% 3% % % % 33% 4% 16% % of landbank cities with disposable income per capita>rmb5, COGO Country Garden Evergrande 67% 43% 39% % 84% 8% % of landbank cities with disposable % of landbank cities with disposable income per capita>rmb, income per capita>rmb15, Source: CEIC, Company data, Credit Suisse estimates The average FAI of COGO s land bank cities is Rmb195,47 mn, higher than Country Garden s Rmb1,464 mn and Evergrande s Rmb116,7 mn. A closer look reveals that 17% of COGO s land bank cities have FAI higher than Rmb3, mn, higher than Country Garden s 16% and Evergrande s 9%. Around 4% of COGO s land bank cities have FAI higher than Rmb,, higher than Country Garden s 16% and Evergrande s 17%. Around 67% of COGO s land bank cities have FAI higher than Rmb, mn, higher than Country Garden s 33% and Evergrande s 41%. Figure 16: Developers land bank cities average 11 FAI (Rmb mn) Landbank cities' average FAI Figure 17: Percentage of land bank cities with 11 FAI >Rmb3, mn, >Rmb, mn, >Rmb, mn COGO Country Garden Evergrande 5,, 15,, 5, 195,47 1, ,7 COGO Country Garden Evergrande Source: CEIC, Company data, Credit Suisse estimates % 9% 8% 7% 6% 5% 4% 3% % % % 17% 4% 16% 16% 9% % of landbank cities with FAI>Rmb3, mn 17% % of landbank cities with FAI>Rmb, mn Source: CEIC, Company data, Credit Suisse estimates The average population inflow (=(permanent population registered population)/registered population) of COGO s land bank cities is 11%, higher than Country Garden s % and Evergrande s 1%. Further analysis suggests that 58% of COGO s land bank cities have population inflow, higher than 41% for Country Garden and 38% for Evergrande. % of COGO s land bank cities have less that 5% population outflow, higher than Country Garden s 59% and Evergrande s 66%. % of COGO s land bank cities have less that % population outflow, higher than Country Garden s 86% and Evergrande s 8%. 67% 33% 41% % of landbank cities with FAI>Rmb, mn China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 8

9 Figure 18: Developers land bank cities average permanent population/registered population 1% % 8% 6% 4% % % Landbank cities' average population inflow (permanent population/registered population1) 11% % COGO Country Garden Evergrande Source: CEIC, Company data, Credit Suisse estimates Play in city centres rather than outskirts 1% Figure 19: Percentage of land bank cities with permanent population/registered population >Rmb%, >95%, >9% % 9% 8% 7% 6% 5% 4% 3% % % % 58% 41% 38% % of landbank cities with population inflow COGO Country Garden Evergrande % % 59% 66% % of landbank cities with <5% population outflow Source: CEIC, Company data, Credit Suisse estimates Different from Evergrande and Country Garden, COGO chooses projects closer to city centres rather than outskirts, which enables it to attract more demand and sell at more favourable prices. We measured all of COGO s projects distances from city centres and compared with those of Evergrande and Country Garden s projects. As shown in the chart below, COGO s projects are on average located within 9. km away from city centres, compared to 16.7 km for Evergrande, and 3. km for Country Garden. Figure : Projects' average distance from city centre: COGO chooses city centres rather than outskirts (km) % 8% % of landbank cities with <% population outflow COGO chooses projects closer to city centres rather than outskirts COGO Evergrande Country Garden Source: Company data, Soufun, Google map, Credit Suisse estimates China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 9

10 Figure 1: Projects distances away from city centres* (km) COGO Distance Evergrande Distance Country Garden Beijing Lagoon Manor 39. Tonghui River Project 13.1 Changzhou Dinosaurs Land Project 4.9 Evergrande Emerald Court 15.8 Fenghuang Road Project 8.9 Ganzhou International Community.5 Guilin The Chief Palace 4.5 Distanc e Hefei The Great Hill.6 Evergrande Palace Hefei 4.7 Country Garden Lakeside City 5.8 Maison du Lac 9.8 Evergrande City Hefei. Nanning Road Project 19.9 Evergrande Emperor Scenic Hefei 8.1 Hohhot Royal East 7.4 Evergrande Atrium Hohhot 13.7 The Arch 5.7 Dragon Cove 5. The Bund 5. Xing an South Road Project 6.8 Hubilie Road Project 7.5 Jilin Royal East.4 Evergrande Palace Jilin 4.4 Royal Waterfront.4 International Community 4.9 Lanzhou The Arch 1.5 Evergrande Oasis Lanzhou 6.3 Evergrande Metropolis 14.5 Evergrande City Lanzhou 19.7 Nanning The Green Peak 6. Evergrande Oasis Nanning 11. HiTech Zone Project 14.5 Nantong The R13 Block 15. Evergrande Venice on the Sea 115. Yancheng Juheng Road Project.5 Evergrande Metropolis Yancheng 5.4 Yangzhou Jade Garden 5.4 Yinchuan International Community 7.5 Evergrande Metropolis Yinchuan 6.4 Sample mean Sample median Overall mean Overall median Note: * Used city government office location to represent city centre. Source: Company data, Soufun, Google map, Credit Suisse estimates China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK)

11 What sales growth to expect? Our detailed analysis on COGO s existing project and future pipeline shows that: (1) YTD sales went up 38% YoY after stripping out the oneoff commercial project disposal in April 1; () H13E sales should be even stronger with 7% of full year s new saleable resources (8% in 1H13) and 67 brand new projects (only 1 in 1H13) launches; (3) 13E sales can grow by 66% YoY (stripping out the oneoff commercial project disposal in April 1), followed by over 3% annual growth in 14E and 15E. Adjusted YTD sales went up 38% YoY Many investors forget to strip out the oneoff commercial project disposal (HK$,53 mn) in April 1 when they calculate COGO s 7M13 sales growth, thus conclude that sales only slightly increased (+4%) YoY. Our calculation shows that, after stripping out this disposal, COGO s 7M13 sales actually grew 38% YoY. COGO also continued to achieve a high sellthrough rate of 81% in 1H13, one of the highest among peers. These together demonstrate COGO s quality land bank and strong sales ability. YTD sales went up 38% YoY after stripping out the oneoff commercial project disposal in April 1 Figure : COGO s 7M13 sales went up by 38% YoY, after stripping out the oneoff commercial project disposal in April 1 1% YTD contracted sales YoY change % 94% 8% 6% 4% % 7% 6% 49% 45% 43% 38% 38% 34% 31% 8% 7% 3% % 15% % 35% % 4% 6% H13E sales should be even stronger; full year sales could +66% YoY Based on our discussions with management, we have come up with what we believe is a saleable resources launch schedule for H13E. Based on this schedule, we believe COGO s contracted sales should be even stronger in H13E because its saleable resources this year are more skewed to the second half: (1) 7% of fullyear s new saleable resources of HK$1.5 bn are scheduled for launch in H13E; and () 67 brand new projects are scheduled to be launched in H13E, compared to only 1 in 1H13. H13E sales should be even stronger with 7% of full year s new saleable resources (8% in 1H13) and 67 brand new projects (only 1 in 1H13) As show in Figure 5, COGO has launched only two brand new projects YTD: Yangzhou Jade Garden and Nantong Gangzha District project. In the rest of the year, it plans to launch Nanning HiTech Zone Project, Changzhou Dinosaurs Land Project, Yancheng Juheng Road Project, Jilin International Community, and Hohhot Xing an South Road Project. It may also launch the Beijing Tonghui River project. Therefore, we expect its contracted sales to surge in H13E. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 11

12 Figure 3: 7% of full year s new saleable resources (HK$1.5 bn) is scheduled in H13E (HK$ bn) % of full year's new saleable resources are scheduled in H13E Carried over from 1 Newly added in 1H13 To be add in H13E 15.5 Figure 4: 67 brand new projects are scheduled in H13E, compared to only 1 in 1H13 (HK$ mn) Contracted sales Number of brand new projects launches (RHS) 5, 4, 3,, 1, 5 Sales to speed up significantly in H13E with 34 brand new launches 1Q1 Q1 3Q1 4Q1 1Q13 Q13 3Q13E 4Q13E Figure 5: Project launch schedule Land Sale Months used Launch Acquisition Launch From acquisition Year City Project 项目名称 Date Date To Launch Hohhot Glorious City 中海锦绣城 n.a 94 Guangzhou Banyan Bay 中海锦榕湾 n.a 11 Hohhot Royal East 中海紫御东郡 n.a Guangzhou The Oakwood 中海橡园国际 n.a 1136 Jilin Royal Waterfront 中海紫御江城 Beijing Lagoon Manor 中海尚湖世家 n.a 11 Hohhot The Arch 中海凯旋门 n.a 1113 Hefei The Great Hill 中海原山 Yinchuan International Community 中海国际社区 Guilin The Chief Palace 中海元居 Jilin Royal East 中海紫御東郡 Nanning The Green Peak 中海雍翠峰 Hohhot Dragon Cove 中海御龙湾 n.a 1811 Lanzhou The Arch 中海凯旋门 Hefei Maison du Lac 中海嶺湖墅 Hohhot The Bund 中海外滩 Ganzhou International Community 中海国际社区 Yangzhou Jade Garden 中海璽園 Nantong Gangzha District The R13 Block 南通市 R13 地塊 Nanning Nanning HiTech Zone Project 南寧市高新區項目 114 3Q13E Changzhou Dinosaurs Land Project 常州市恐龍園項目地塊 116 3Q13E Yancheng Juheng Road Project 聚亨路项目 Q13E Jilin International Community 中海国际社区 188 4Q13E Hohhot Xing an South Road Project 兴安南路项目 Q13E 14 Beijing Tonghui River Project 通惠河用地 E Changzhou Fenghuang Road Project 凤凰路项目 E Hefei Nanning Road Project 南宁路项目 E Hohhot Hubilie Road Project 忽必烈路项目 E Average 11 Source: Company data, Soufun, Credit Suisse estimates COGO plans HK$6 bn saleable resources for 13E (not including Beijing Tonghui River project). We forecast its 13E contracted sales to reach HK$18.75 bn, which implies 66% YoY growth excluding the oneoff commercial project disposal in April 1. Our sales forecast implies a 7% sellthrough rate, same as 1 and very conservative considering the stronger housing market sentiment this year. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 1

13 Figure 6: 1113E saleable resources and sellthrough rate (HK$ bn) Saleable resources Contracted sales Sell through rate (RHS) % % 7% A 1A 13E Note: Both 1 saleable resources and contracted sales exclude the oneoff sales from disposing a commercial project in April 1. 8% 7% 6% 5% 4% 3% % % % Figure 7: 13E contracted sales could increase by 66% YoY, based on our forecast (HK$ bn) % YoY Contracted sales % YoY A 1A 13E Note: Both 1 saleable resources and contracted sales exclude the oneoff sales from disposing a commercial project in April 1. Over 3% annual sales growth till 15, driven by land acquisitions supported by strong financials Historical data shows that COGO s contracted sales are highly correlated with the number of projects: on average each project has contributed around HK$75 mn contracted sales each year. We believe this, to some extent, reflects the market depth of a typical tier 3 city housing market. Therefore, we believe the key to achieving 3% annual sales growth target till 15 is to retain land banking intensity. Based on our calculation, to achieve 3% annual sales growth till 15E, COGO needs to launch eight new projects in 13E, eight in 14E and ten in 15E. If we consider the fact that older projects normally sell slower, the number of new projects that are needed to maintain the growth rate could be higher. COGO targets at least 3% growth on land banking till 15E. We believe this is sufficient to maintain 3% annual sales growth, based on our analysis above. 13E sales can grow by 66% YoY (stripping out the oneoff commercial project disposal in April 1), followed by over 3% annual growth in 14E and 15E Figure 8: Each project on average has contributed around HK$75 mn contracted sales each year (HK$ mn) Contracted sales per project 769 Historical average annual contracted sales per project is around HK$75 mn A 11A 1A Note: 1 contracted sales exclude oneoff sales from disposing a commercial project in April Figure 9: Contracted sales growth has been driven by the number of projects (HK$ mn) Contracted sales Number of proejcts on sale (RHS) 35, , 4 4 5, 35 33, , 17 31,688 4,375, 18, , 5 11,68 4,1 7,687 5 A 11A 1A 13E 14E 15E Note: 1 contracted sales exclude oneoff sales from disposing a commercial project in April 1. Unlike some peers whose land banking is constrained by weak financials, COGO has the strongest financials among peers to support its land banking: by the end of 1H13, COGO s net gearing was only 1.4%, compared to industry average of around 6%. Its cash on hand more than tripled from HK$,86 mn as of end 11 to HK$9,135 mn as of end 1H13. Therefore, we believe COGO is in a very good position to replenish its land bank should good opportunities show up. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 13

14 Figure 3: Net gearing comparison (%) A 11A 1A 1H () Source: Company data Figure 31: Cash on hand (HK$ mn), 9,135 9, 7,83 8, 7, 6, 5, 4,,86 3,,8, 1, A 11A 1A 1H13A Source: Company data Figure 3: COGO land acquisition history Attributable Average Site Total Attributable Land Land Interest Area GFA GFA Cost Cost Name of Project City Date (%) (sq m) (sqm) (sqm) (Rmb mn) (Rmb/sqm) The Chief Palace Guilin 98 64,3 163, 163, 31 1,416 International Community Yinchuan 7 1,351,3 3,314,,319,8,794 1,5 subtotal 1,415,6 3,477,,48,9 3,5 1,18 Royal Waterfront Jilin ,8 169,5 169, ,93 The Bund Hohhot ,857 14, 14, 4 1,963 The Great Hill Hefei ,7 399, 399, 78 1,77 The Green Peak Nanning , 183, 183, 414,61 The Arch Lanzhou ,9 315,5 315,5 57 1,87 The Arch Lanzhou ,797 7, 7, 14 1,987 Maison du Lac Hefei ,467 15,754 9,45 6,79 11 subtotal 486,53 1,5,86 1,441,984,64 1,833 International Community Ganzhou ,94 1,4,47 1,33, Jade Garden Yangzhou 176 3,6 33,46 33, ,6 International Community Jilin ,94 688, 584, Gangzha District The R13 Block Nantong 1 199,671 76,437 76, ,139 New and HiTech Zone Project Nanning 114 6,38 36,547 36,547 78,169 Dinosaurs Land Project Changzhou ,569 66,7 66,7 583,186 1 subtotal 1,4,69 3,679,17 3,47,568 4,489 1,317 Xing an South Road Project Hohhot ,747 44,65 44,65 8 1,98 Juheng Road Project Yancheng ,497 47,58 37, ,3 Fenghuang Road Project Changzhou ,3 58,58 58, ,651 Nanning Road Project Hefei ,4 671,5 671,5 1 3, Hubilie Road Project Hohhot ,79 51,56 51,56 743, YTD subtotal 7,736,381,74,16,355 4,9, Source: Company data China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 14

15 What margins to expect? Our projectbyproject analysis shows that COGO on average raised ASP by 11% per annual for each project since launch, much higher than the cities average of 4%, implying strong pricing power. COGO also shows clear competitive advantages on cost savings: (1) land cost is only 16% of 1 contracted sales ASP; () construction cost enjoys % savings on materials due to centralised purchase by its parent company China State Construction Engineering Corporation; (3) Lowest financing cost (4.7%) among mid cap peers thanks to its SOE background and active offshore financing (63%); (4) one of the lowest SG&A expenses (4%) thanks to its strong brand name. We believe its strong pricing power and outstanding cost control will protect margin downside and support longterm gross margin to stay around 35%. COGO on average raised ASP by 11% per annum for each project since launch When COGO was acquired by COLI in, it had big portions of land bank in Beijing and Guangzhou, which enjoy high ASP. After the acquisition, COGO became COLI s tier 3 city flagship and started acquiring land exclusively in tier 3 cities. This product mix change from tier 1 cities to tier 3 cities caused the overall ASP decline. Some investors are concerned that after the transition COGO s ASP may not increase strongly because tier 3 cities housing price normally grows slower than that of tier 1 and tier cities. However, our projectbyproject analysis shows that COGO on average raised ASP by 11% per annual for each project since launch, much higher than the cities average of 4%, implying strong pricing power. COGO on average raised ASP by 11% per annum for each project since launch, much higher than the cities average of 4%, implying strong pricing power Figure 33: Contracted sales has been moving from high ASP tier 1 cities to low ASP tier 3 cities (HK$/sqm) 11A sales ASP 1A sales ASP Figure 34: Contracted ASP and booked gross margin (HK$/sqm) Contracted ASP Booked gross margin (RHS) (%) 35, 5, 7 3, 5,, 15,, 15, , 5,, 5, 16,63,6,889,91 3 Source: Company data A 11A 1A 1H13A COGO on average raised ASP by 11% per annum for each project, much higher than cities average of 4% Our projectbyproject analysis of all COGO s onsale projects shows that: (1) 8% of the projects ASP increased after launch date; () projects ASP on average increased 11% per annual, much higher than the cities average of 4%. We believe the fasterthancity average ASP increase is because: (1) COGO, same as COLI, normally launches projects at a relatively low ASP to attract more buyers. After building up the sentiment, it gradually increases the ASP; and () after the first phase is delivered and the buyers have experienced the infrastructure and property management, COGO is able to raise ASPs more easily given its good reputation. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 15

16 Figure 35: Projects on average increased 11% per annum since launch date, much faster than city average of 4% Project City Project Launch ASP CAGR ASP CAGR and city Project Name 项目名称 City date since launch over same period difference Royal East 中海紫御东郡 Hohhot 16 13% 1% 14% Royal Waterfront 中海紫御江城 Jilin 1186 % 1% 1% Lagoon Manor 中海尚湖世家 Beijing 11 % 6% 4% The Arch 中海凯旋门 Hohhot % 1% 1% The Great Hill 中海原山 Hefei % 3% 1% International Community 中海国际社区 Yinchuan % 3% 4% The Chief Palace 中海元居 Guilin % 1% 7% Royal East 中海紫御東郡 Jilin 1415 % 3% 17% The Green Peak 中海雍翠峰 Nanning % 5% 6% Dragon Cove 中海御龙湾 Hohhot % 8% % The Arch 中海凯旋门 Lanzhou 186 3% 6% 3% Maison du Lac 中海嶺湖墅 Hefei 197 % 8% 1% The Bund 中海外滩 Hohhot 193 9% 5% 3% International Community 中海国际社区 Ganzhou % % 41% Jade Garden 中海璽園 Yangzhou 1333 % % % Average 11% 4% 7% Median 8% 3% 5% Source: Company data, Soufun, CEIC, CRIC, Credit Suisse estimates Deep ploughing in existing cities to enjoy more favourable ASP As shown in Figure 36 and Figure 37, ASP can be raised not only when launching new phases, but also when launching a second project in the existing city. Because after building good reputation, the developer doesn t have to offer lower ASP promotion to attract buyers on the debut date. We believe this is why COGO, like COLI, prefers deep ploughing in existing cities rather than moving to new cities. Moreover, besides a more favourable ASP, deep ploughing in existing cities can also lead to: (1) better land banking opportunity, as the developer can leverage its well established relationship with the local government for better location and price; () SG&A cost saving, while expanding into new cities always involves high initial administrative and advertisement costs, etc. Figure 36: If the second project is in a different city, its first phase usually needs to offer a discount to attract more buyers (Rmb/sqm) Figure 37: If the second project is in the same city, its first phase may not need to offer discounts because of the reputation built by the first project (Rmb/sqm), 9, 8, 7, 6, 5, 4, 3,, 1, 7, 8, 7, 8, Project 1 Phase 1 Project 1 Phase Project Phase 1 Project Phase Note: The numbers are hypothetical. Source: Credit Suisse estimates Source: Credit Suisse estimates As COGO is currently still in the early stage of business, it has on average 1.9 projects per city, lower than many peers. Management targets to bring this number to around 3. To achieve this target, it plans to enter only two to three new cities each year, and acquire, 9, 8, 7, 6, 5, 4, 3,, 1, 7, 8, 8, 9, Project 1 Phase 1 Project 1 Phase Project Phase 1 Project Phase Note: The numbers are hypothetical China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 16

17 more projects in existing cities. We believe this deep ploughing strategy should help the company to improve ASP and margins going forward. Figure 38: Average number of projects per city 7 Number of projects per city Source: Company data Strong cost control to protect margin downside COGO focuses on housing development in tier 3 cities where housing price is normally lower than tier 1 and tier cities. Therefore, cost control plays a crucial role in profitability. COGO also shows clear competitive advantages on cost savings: (1) land cost is only 16% of 1 contracted sales ASP; () construction cost enjoys % savings on materials due to centralised purchase by its parent company China State Construction Engineering Corporation; (3) Lowest financing cost (4.7%) among mid cap peers thanks to its SOE background and active offshore financing (63%); (4) one of the lowest SG&A expenses (4%) thanks to its strong brand name. Land cost: Average land bank cost is 16% of 1 contracted sales ASP According to the management, COGO s average land bank cost is around Rmb1,7sq m, or 16% of 1 contracted sales ASP. This is better than many peers, and makes it easier for the company to achieve better margins. COGO shows clear competitive advantages on cost savings Figure 39: Developers average land bank cost as % of 1 contracted sales ASP (%) Total landbank average cost per GFA as % of 1 contracted sales ASP Source: Company data China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 17

18 Construction cost enjoys % savings on materials due to centralised purchase by its parent company CSCEC The construction materials of COGO and COLI are centrally purchased by their parent company, China State Construction Engineering Corporation (CSCEC). As the largest purchaser of construction materials in China, CECEC has strong bargaining power and can normally save around % on materials, according to the management. Low SG&A and high sellthrough rate by leveraging its parent company COLI s brand name COGO s parent, COLI, was incorporated in Hong Kong in 1979, and has since successfully invested and developed numerous popular and exquisite properties in over 3 cities or regions in mainland China, Hong Kong, and Macau. With longterm brand building effort, China Overseas Property ( 中海地产 ) has developed into a wellrecognised property brand in China. One of the lowest SG&A expenses (4%) thanks to strong brand name. As COLI s subsidiary, COGO is allowed to use the brand China Overseas Property for the projects it develops and sells. In return, COGO only needs to pay COLI 1% of the sales value as royalty fee. By sharing COLI s brand name, COGO can gain high customer acceptance, which makes selling much easier. As a result, COGO enjoys high sellthrough rate and low SG&A expenses. Figure 4: COGO s SG&A as % of contracted sales is one of the lowest among peers (%) 11A 1A Figure 41: COGO s sell through rate is one of the highest among peers (%) 11A 1A Source: Company data Source: Company data Lowest financing cost among mid cap peers thanks to its SOE background and active offshore financing COGO s effective finance cost is comparable with that of COLI and CR Land, and much lower than mid cap peers, thanks to its strong SOE background and active offshore financing. As of 1H13, offshore financing, which has much lower interest rate than onshore financing, takes 63% of its total borrowings, compared to 87% for COLI. Management plans to further bring down its financing cost by increasing offshore financing. Lowest financing cost (4.7%) among mid cap peers thanks to its SOE background and active offshore financing (63%) China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 18

19 Figure 4: COGO financing cost is the lowest among mid cap peers (%) 11A 1A Figure 43: COGO plans to further bring down financing cost by increasing offshore financing (%) 11A 1A Note: Average interest rate is calculated using financing cost divided by average total borrowings. This is slightly different from the numbers announced by the companies due to different calculation method. Source: Company data Longterm gross margin could be around 35% We believe COGO s strong pricing power and cost control will together protect margin downside. We expect longterm gross margin to stay around 35%. Figure 44: Longterm cost structure comparison (Rmb/sq m) COGO COLI Remarks ASP 8, 1,5 Revenue 7,56 1,5 COGO deducts business tax 5.5% in Revenue Business tax (688) COLI deducts business tax 5.5% in Cost of sales Land cost (1,7) (3,5) Construction cost (,9) (3,7) Finance cost (161) () 5% financing cost for COGO, and 4% for COLI Gross profit,799 4,411 Gross margin (%) 35% 35% We expect COGO s longterm gross margin to stay around 35% Figure 45: COGO s longterm gross margin can stay around 35% (%) 1A 15E Source: Company data, IBES consensus, Credit Suisse estimates China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 19

20 Valuation and catalysts Valuation attractive Our target price of HK$1.3 is based on 15% discount to its 13E NAV. COGO s current share price offers high sales and earnings growth, strong financials, SOE background, and experienced management at 8% discount to NAV, compared to 1% discount to NAV for COLI. Figure 46: P/E comparison 16 13E 14E 15E Figure 47: P/B comparison.5 13E 14E 15E Dupont analysis ROE can be used to measure a company s capability of utilising capital efficiently to generate profit, in our view. COGO s ROE is the highest among all the developers under our coverage. We break down ROE into three components in our analysis: net margin, asset turnover, and leverage. Figure 49 to Figure 51 show that COGO has a high net margin of around 18%, the highest asset turnover, and average level leverage. Figure 48: ROE 1A ROE 13E ROE 14E ROE 35% 3% 5% % 15% % 5% % Figure 49: Net margin 1A net margin 13E net margin 14E net margin 3% 5% % 15% % 5% % China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK)

21 1/1/ 3/1/ 5/1/ 7/1/ 9/1/ 11/1/ 1/1/11 3/1/11 5/1/11 7/1/11 9/1/11 11/1/11 1/1/1 3/1/1 5/1/1 7/1/1 9/1/1 11/1/1 1/1/13 3/1/13 5/1/13 7/1/13 1 August 13 Figure 5: Asset turnover 1A asset turnover 13E asset turnover 14E asset turnover 45% 4% 35% 3% 5% % 15% % 5% % Figure 51: Leverage 1A leverage 13E leverage 14E leverage Catalysts Two new land acquisitions just announced to add to NAV Historical data shows that quality new land acquisitions drove COGO s share price, because they were NAV accretive and added visibility to COGO s growth outlook. COGO just announced on last Friday (9 Aug 13) after market close, that it acquired two new land parcels in Hohhot and Hefei in July. We conservatively estimate the gross margin can reach 6% and 7%, and can add GAV by 7% and 3%, respectively. We believe this positive news can support nearterm share price performance. Historical data shows that quality new land acquisitions drove COGO s share price Figure 5: Quality new land acquisitions used to drive share price in the past; two new land acquisitions just announced to support nearterm share price performance 5% 4% 3% % % % % Source: Company data, Bloomberg, Credit Suisse estimates Contracted sales may surge in H13E supported by 7% of full year s new saleable resources As mentioned previously, we believe COGO s contracted sales should rise sharply in H13E because its saleable resources this year are more skewed to the second half: (1) 7% of fullyear s new saleable resources of HK$1.5 bn are scheduled for launch in H13E; () 67 brand new projects are planned to be launched in H13E, compared to only 1 in 1H13. China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK) 1

22 Figure 53: 7% of full year s new saleable resources (HK$1.5 bn) is scheduled in H13E (HK$ bn) % of full year's new saleable resources are scheduled in H13E Carried over from 1 Newly added in 1H13 To be add in H13E Possible shareholding increase by parent company COLI 15.5 Figure 54: 67 brand new projects are scheduled in H13E, compared to only 1 in 1H13 (HK$ mn) Contracted sales Number of brand new projects launches (RHS) 5, 4, 3,, 1, 5 Sales to speed up significantly in H13E with 34 brand new launches 1Q1 Q1 3Q1 4Q1 1Q13 Q13 3Q13E 4Q13E Currently, COLI is COGO s largest shareholder with a 37.98% share. We expect that COLI would want to increase its shareholding to over 5%, thus be able to consolidate COGO in its financial statements. Mr. Yung Kwok Kee, the previous chairman of Shell Electric (81.HK) and the second largest shareholder of COGO (81.HK) with 18.6% share, is more likely to maintain his shareholding, while Mr. Wang Tao Guang and Mr. Cheng Yang are more likely to sell their shares, in our view. Their shareholding of 14.89% could enable COLI to increase its shareholding to 5.87%. If this does happen in the future, COGO should be able to get more attention and resources from COLI, thus share price should react positively, in our view. Figure 55: COGO s shareholding structure Shareholder Shareholding COLI 37.98% Mr. YUNG Kwok Kee 18.6% Mr. WANG Tao Gaung 9.9% Mr. CHENG Yang 4.99% Source: HKEX China Overseas Grand Oceans Group Ltd. (81.HK / 81 HK)