房地产交易的潜在赢家

1、February 18, 2020 09:00 PM GMTChina Consumer and China IndustrialsPotential Winners from Property CompletionsIn our view, China property completions are heading into an upcycle. We initiate coverage on six property completion-related stocks in two accompanying reports: B2B players BNBM and Kibing at

2、 OW; and B2C players Oppein, Suofeiya at OW; Shangpin, Opple at EW.Morgan Stanley does and seeks to do business with companies covered in Morgan Stanley Research. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of Morgan Stanley

3、Research. Investors should consider Morgan Stanley Research as only a single factor in making their investment decision.For analyst certification and other important disclosures, refer to the Disclosure Section, located at the end of this report.+= Analysts employed by non-U.S. affiliates are not re

4、gistered with FINRA, may not be associated persons of the member and may not be subject to FINRA restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.ContributorsMORGAN STANLEY ASIA LIMITED+Hanli Fan, CFAEquity Analyst+85

5、2 3963-1017 HYPERLINK mailto:Hanli.Fan Hanli.FanMORGAN STANLEY ASIA LIMITED+Hangjie ChenEquity Analyst+852 2848-7168 HYPERLINK mailto:Hangjie.Chen Hangjie.ChenMORGAN STANLEY ASIA LIMITED+Lillian LouEquity Analyst+852 2848-6502 HYPERLINK mailto:Lillian.Lou Lillian.LouMORGAN STANLEY ASIA LIMITED+Kevin

6、 Luo, CFAEquity Analyst+852 2239-1527 HYPERLINK mailto:Kevin.Luo Kevin.LuoChina Consumer and China IndustrialsIPotential Winners from Property Completionsn our view, China property completions are heading into an upcycle. We initiate coverage on six property completion-related stocks in two accompan

7、ying reports: B2B players BNBM and Kibing at OW; and B2C players Oppein, Suofeiya at OW; Shangpin, Opple at EW. Industry ViewChina/Hong Kong Consumer In-LineChina Industrials In-LineWe are bullish on the China property completion upcycle. Chinas National Bureau of Statistics (NBS) recorded 16% yoy g

8、rowth in property completions in 4Q19, after 28 months of data in negative territory. We believe that 4Q19 was the inflection point, and the upturn will continue in 2020. Apartments completed, forecast from 4Q19 to 2021, were the ones pre-sold in 2016 and 2017. The upcycle is evidenced by higher gro

9、wth in total property development funds, acceleration in leading indicators, and 20-25% yoy revenue growth forecasts for property developers in 2019-21, according to our China property team. We expect a surge in property completions to act as the primary share price catalyst for related companies in

10、 2020.Fundamental impacts vary by company product offerings. Weseeking new earnings growth drivers. For the China Consumer industry, pre-decorated apartments and young consumers are struc- turally shifting the channel landscape of furnishing companies. The property developer, online, and decoration

11、channels are taking share from the traditional offline retail channel. In our view, companies can gain significant share if they can quickly react to this shift in sales channels.Initiate on BNBM, Kibing, Oppein, Suofeiya at OW; Shangpin and Opple at EW. All six companies appear favorably positioned

12、, as they are leaders in their respective segments, each with strong capability to benefit from the property completion tailwinds. Our ratings and order of preference are based on stock risk-reward profiles. Oppein, BNBM, and Suofeiya are our top picks. Refer to the accompanying two separate reports

13、 for our B2B initiations (BNBM and Kibing), and our B2C initiations (Oppein, Suofeiya, Shangpin, Opple).Exhibit 1:Key metrics - ratings and price targetsare taking share from concrete apartments. For B2B business, funda- mentals have improved from 3Q19, ahead of property completions. We believe that

14、 the fundamental upturn will continue in 2020, sup- ported by a surge in construction activities. For B2C, we expect the weak demand in 2019 to turn around in 2Q/3Q20, given that con- sumers should start purchasing home durables after obtaining prop- erty.Market share dynamic, channel strategy and e

15、xpansion into other categories are company differentiators. For the China Industrials industry, BNBM and Kibing are, respectively, expanding into waterproof materials and other high-margin glass products,KibingHangjie Chen 601636.SS OW2,0246.15.316%split the property completion-related companies bus

16、iness modelsCompanyAnalystTickerRating Market CapPTClose PriceUpside/(downside)US$ mnRmbRmbinto B2B (sells to property developers) and B2C (sells to consumers)OppeinHanli Fan603833.SSOW6,902139.0114.821%BNBMHangjie Chen000786.SZOW6,22530.525.718%businesses. We also consider the fact that pre-decorat

17、ed apartmentsSuofeiyaHanli Fan002572.SZOW2,66024.020.418%OppleHanli Fan603515.SS EW2,87327.026.62% ShangpinHanli Fan300616.SZ EW2,08970.073.5-5%Source: Refinitiv, Morgan Stanley Research. e = Morgan Stanley Research estimates. Note: Closing prices in this report are as of the market close on Februar

18、y 17, 2020, unless otherwise indicated.Exhibit 2:Key metrics - valuations and forecastsPT ImpliedEarnings growth20e P/E19e20e21e20e P/E21e P/ETradingCompanyOppein21.518.026.018%20%20%BNBM13.811.916.4-84%699%16%Suofeiya15.413.618.012%14%13%Kibing8.97.710.310%20%16%Opple18.115.918.57%15%14% Shangpin22

19、.119.121.015%18%16%Source: Refinitiv, Morgan Stanley Research. e = Morgan Stanley Research estimates.ContentsKey ChartsOrder of PreferenceInvestment Summary12Potential Impact from the Property Market21Property Completion-Related Companies26 China Home Furnishings Segment33 Potential Impact from Covi

20、d-1935 Comps TableKey ChartsExhibit 3:Property new starts, sales, completions GFA monthly yoy growth (3MMA)40%30%20%10%0%-10%-20%-30%Exhibit 4:20%28%32%50%86%50%14%68%73%80%Pre-decorated apartments nationwide penetration (left) and pre-deco- rated apartments city-tier penetration in 2018 (right)12%8

21、8%8%92%100%90%80%70%60%50%40%30%20%10%0%20162017201820191st tier 2nd tier 3rd tierStarted yoy% (3MMA)Sold yoy% (3MMA)Completed yoy% (3MMA)Source: National Bureau of Statistics of China (NBS), Morgan Stanley Research.Pre-decoratedConcreteSource: Zhilian, Morgan Stanley Research.and belowExhibit 5:Con

22、struction process and corresponding property completion-related companies in each stageSource: Morgan Stanley Research.Exhibit 6:Revenue contribution estimates from domestic property developersExhibit 7:Revenue growth, 2019/20e100%11%10%10%30%25%80%20%70%20%17%60%50%89%89%75%85%90%100%15%10%9%13% 14

23、%13%14%10%12%40%6%5%30%5%20%0%10%0%15%13%9%BNBMKibingOppein2019eSuofeiya2020eShangpinOpplechannel (B2B), domestic retail channel (B2C), and overseas channel90%35%32%KibingBNBMOppleOppeinSuofeiyaShangpinChina B2B channelChina B2C channelOverseasSource: Company data, Morgan Stanley Research. Note: Opp

24、les B2B channel also includes offices and public buildings.Source: Company data, Morgan Stanley Research. e = Morgan Stanley Research estimates.Order of PreferenceExhibit 8:Property completion-related stocks: Order of preferenceOppeinBNBMSuofeiyaKibingOppleShangpin603833.SS000786.SZ002572.SZ601636.S

25、S603515.SS300616.SZRatingOverweightOverweightOverweightOverweightEqualweightEqualweightTrading CurrencyCNYCNYCNYCNYCNYCNYPrice Target139.030.524.06.127.070.0Current Price114.825.7420.45.2626.673.5Upside/(Downside) (%)21%18%18%16%2%-5%Market Cap (in USD mm)6,848.66,225.12,689.02,024.22,871.92,039.6Av

26、g Daily Traded Vol (in USD mm17.532.032.619.39.85.6Morgan Stanley Estimates FY19eCNYCNYCNYCNYCNYCNYSales13,47313,7297,7279,4588,3767,312EBITDA2,4633,1031,5762,334947667EBIT1,9732,6081,2671,553834545EPS4.50.21.20.51.32.8FY20eSales16,17418,1448,72810,7999,3698,370EBITDA3,1034,0551,8732,7261,101807EBIT

27、2,4253,5261,4941,874974647EPS5.31.91.30.61.53.3FY19 MSe vs. Consensus MeanSales0.3%7.0%-1.1%2.8%0.7%-1.0%EBITDA-1.9%8.9%3.4%-11.1%-9.0%-2.1%EBIT-4.7%12.4%-0.3%-2.2%-11.0%-11.4%EPS1.4%-27.4%5.2%-0.9%3.9%0.8%FY20 MSe vs. Consensus MeanSales2.8%26.6%0.2%8.5%1.3%-4.4%EBITDA3.6%12.6%7.0%-6.3%-6.5%-9.6%EB

28、IT-2.0%17.0%1.5%8.5%-9.1%-12.2%EPS2.4%14.5%6.0%6.2%6.0%-0.8%Valuation Multiples at Last Close FY19eP/E25.7x110.5x17.6x10.7x20.8x26.1xEV/EBIT23.4x17.1x14.2x10.4x24.4x23.0 xEV/EBITDA18.7x14.4x11.4x7.0 x21.5x18.8xEV/Sales3.4x3.3x2.3x1.7x2.4x1.7xFCF Yield1.2%-1.3%4.2%6.2%4.1%2.5%FY20eP/E21.5x13.8x15.4x8

29、.9x18.1x22.1xEV/EBIT18.3x12.4x11.4x8.2x19.0 x18.4xEV/EBITDA14.3x10.8x9.1x5.7x16.8x14.8xEV/Sales2.7x2.4x1.9x1.4x2.0 x1.4xFCF Yield2.3%5.4%5.0%7.5%4.9%4.0%Implied Multiples on MS Price Target FY19eP/E31.2x130.9x20.7x12.4x21.2x24.8xEV/EBIT28.1x20.4x16.4x11.5x23.4x21.4xEV/EBITDA22.5x17.1x13.2x7.7x20.6x1

30、7.5xEV/Sales4.1x3.9x2.7x1.9x2.3x1.6xFY20eP/E26.0 x16.4x18.1x10.3x18.4x21.1xEV/EBIT26.7x16.4x16.6x9.8x23.9x24.1xEV/EBITDA20.9x14.3x13.3x6.8x21.1x19.3xEV/Sales4.0 x3.2x2.8x1.7x2.5x1.9xSource: Refinitiv, Morgan Stanley Research estimates. e = Morgan Stanley Research estimates.Investment SummaryHangjie

31、Chen initiates coverage on two B2B property completion-re- lated companies in the China Industrials industry. Please see the com- pany details in the separate report, China Industrials: Potential Winners from Property Completions - Initiating on Two Industrials Stocks:Beijing New Building Material (

32、BNBM, 000786.SZ, OW, PT=Rmb30.5)Kibing (601636.SS, OW, PT=Rmb6.1)Hanli Fan initiates coverage on four B2C property completion-related companies in the China Consumer industry. Please see the company details in the separate report, China Consumer: Potential Winners from Property Completions - Initiat

33、ing on Four Consumer Stocks.Oppein (603833.SS, OW, PT=Rmb139.0)Suofeiya (002572.SZ, OW, PT=Rmb24.0)Shangpin (300616.SZ. EW, PT=Rmb70.0)Opple (603515.SS, EW, PT=Rmb27.0)From a top-down perspective, we are bullish on the property comple- tion cycle in 2020, and we expect the upturn to continue from 2H

34、19 to 1H21, following the number of apartments pre-sold in 2016 and 2017. Company-specific performance depends on products offerings, market dynamics, and individual financial performance. Across our three reports published today, we initiate on six stocks that will giveinvestors an opportunity to i

35、nvest across subsegments and cycle stages. BNBM and Kibing are construction material companies that should continue to benefit from property completion construction activities. Oppein, Suofeiya, Shangpin, and Opple are home furnish- ings companies. Consumers would start purchasing home furnish- ings

36、 after getting apartments from developers. We expect furnishing fundamentals to turn upward in 2Q/3Q20.Under Morgan Stanley Research current China Industrials and China Consumer coverages, market sentiment of the following 12 stocks is likely to be driven by property completion activities in 2020:Co

37、nstruction and decoration activities: Gold MantisConstruction and decoration materials: Lesso, BNBM, Kibing, Oriental Yuhong, WeixingCustomized furniture: Oppein, Suofeiya, ShangpinLighting: OppleKitchen appliances: Robam, VattiWhite goods companies (Gree, Midea, Haier Smart Home, Haier Electronics)

38、 should also benefit from the property completion upcycle. However, because of their large scale and reliance on replacement demand, the effects are unlikely to be as direct as expe- rienced by the other 12 stocks.Exhibit 9:Property completion stocks under Morgan Stanley China Consumer and China Ind

39、ustrials teams coverageIndustryB2B/B2CCompanyTickerAnalystProduct categoryRevenueChina B2Bcontribution eChina B2CstimatesOverseasKibing601636.SSHangjie ChenGlass89%0%11%Lesso2128.HKKevin LuoPlastic pipe95%2%3%China IndustrialsBNBM000786.SZHangjie ChenGypsum board89%10%1%B2BGold Mantis002081.SZHangji

40、e ChenDecoration90%10%0% Oriental Yuhong002271.SZHangjie ChenWaterproof materials84%15%1%Weixing002372.SZHangjie ChenPlastic pipe33%63%4%Robam002508.SZHanli FanKitchen appliances20%79%1%Opple603515.SSHanli FanLighting15%75%10%Oppein603833.SSHanli FanKitchen cabinets13%85%3%Suofeiya002572.SZHanli Fan

41、Wardrobes9%90%1%China ConsumerB2CVatti002035.SZHanli FanKitchen appliances8%83%9%Gree000651.SZLillian LouLarge appliances7%82%11%Midea000333.SZLillian LouLarge appliances5%52%43%Haier Smart Home600690.SSLillian LouLarge appliances3%48%49%Haier Electronics1169.HKHanli FanLarge appliances3%89%8%Shangp

42、in300616.SZHanli FanCustomized funiture0%100%0%Source: Company data, Morgan Stanley Research estimates. Note: Rows shaded in grey refer to the six stocks that we are initiating coverage on.We are confident on property completionsin 2020After 28 months (including residential, offices, public building

43、s, etc) in negative territory , NBS property completion monthly growth rates returned to positive territory in August 2019, and recorded 16% yoy growth for 4Q19. Property developers intention to extend the construction period was the main reason for the delayed completion downcycle from 2017 to 2019

44、.Recently, underlying data have been pointing to a recovery in prop- erty completions in 4Q19, and we believe that the trend will last across 2020 and into 2021. Property construction growth surged in 2019, indicating a late-stage acceleration in property development, i.e., stemming from constructio

45、n activities around the completion period. We have also seen other evidence supporting our view: (1) growth in total property development funds has surpassed that in housing sales since late 2018; (2) leading indicators, such as produc- tion of elevators and plate glass, have recorded accelerated gr

46、owth in 2019; and (3) major developers expect 20-25% yoy revenuegrowth in 2019/20/21. We believe that the subdued construction activities in 2018 were primary reasons for delayed completions, and that a recovery in completions will last until 1H21. Apartments that will be delivered from 4Q19 to 2021

47、 were pre-sold in 2016 and 2017, and mostly driven by 3rd tier cities. We expect property completions to increase 10% yoy in 2020.Along with the strong completion cycle, we see a structural change for delivering more pre-decorated apartments than concrete apart- ments, particularly in 1st and 2nd ti

48、er cities. Under pre-decoration apartments, decoration activities such as water and electricity instal- lation, plaster work, carpentry work, painting work, kitchen cabinets and kitchen appliances installation etc., are mostly carried out by property developers rather than property owners (the consu

49、mers). A shift in this direction will drastically change the business model of construction materials and home durables companies. These compa- nies will see more business orders from the property developers (B2B channel) than from consumers (B2C channel). Related compa- nies that can quickly shift

50、their business model to adapt to this change in the property market should see better business perfor- mance.Exhibit 10:Property new starts, sales, completions GFA monthly yoy growth (3MMA)40%30%20%10%0%-10%-20%-30% Started yoy% (3MMA)Sold yoy% (3MMA)Completed yoy% (3MMA)Source: NBS, Morgan Stanley

51、Research.Exhibit 12:Pre-decorated apartments on sale growthExhibit 11:Property completions GFA annual yoy growthsqm mn 10% 7% -4%-7%-8% 3% 2% 6%6%1,2001,000800600400200-2011 2012 2013 2014 2015 2016 2017 2018 2019 2020EGross floor area completedCompleted yoy%Source: NBS, Morgan Stanley Research. e =

52、 Morgan Stanley Research estimates.Exhibit 13:Pre-decorated apartments penetration nationwide (left) and pre- decorated apartments penetration by city tier, 2018 (right)12%10%8%6%4%2%0%-2%-4%-6%-8%-10%3,000,0002,500,0002,000,0001,500,0001,000,000500,000-20162017201811M1811M19# of pre-decorated units

53、YoY%70%Unit60%37%28%50%30%10%-10%-30%-50%100%14%50%73%68%88%80%92%86%50%32%12%20%28%8%90%80%70%60%50%40%30%20%10%0%Source: AVC, Morgan Stanley Research.20162017201820191st tier 2nd tier 3rd tierPre-decoratedConcreteSource: Zhiyan, Morgan Stanley Research.and belowEffects on property completion stock

54、sWe expect two groups of related companies to benefit from the surge in property completions: (1) companies that provide products to developers around the late stage of property construction; and (2) companies that provide products to consumers who are owners of the property. BNBM and Kibing in the

55、China Industrials industry, and Suofeiya, Oppein, Shangpin, and Opple, in the China Consumer industry, fit this theme.Given different product offerings, we split the companies business models into B2B and B2C. For B2B business, companies sell products to property developers, and for B2C business, co

56、mpanies sell prod- ucts to consumers (via various channels, including online, offline, decoration companies, etc.). A company can operate both B2B and B2C business models (such as Robam, Oppein). When considering the business impact from the property industry, we also have to con- sider the construc

57、tion process difference between pre-decorated apartments and concrete apartments.B2B business. Given that the delivery of products to property devel- opers happens before property completion, fundamentals of B2B business started picking up from 2Q19, reflecting a turning point in completions in 4Q19

58、. Share prices started to outperform from October 2019 because of improvements in fundamentals. We believe that the decoration activity and property completion upcy- cles will continue in 2020 and 2021. We expect the fundamentals and share prices of B2B businesses will continue to be strong in 2020.

59、B2C business. B2C business experienced a downcycle in 2019, sub- dued by property market headwinds. Given that consumer pur- chasing of household durables occurs 3-6 months after property completion, we still have not seen a recovery in B2C business funda- mentals. Share prices here underperformed t

60、he CSI300 index in 4Q19. We believe that the strong B2B business in 2H19 provides strong evidence of a surge in property completions. Thus, we expect consumers will start purchasing home durables in the wake of obtaining these apartments, and B2C business fundamentals should pick up from 2Q/3Q20.Exh