Redsun Properties Group Limited (“Redsun Properties”, or the “Group”, stock code: 1996) a leading comprehensive property developer in Mainland China has been given a “Buy” rating by ABC International, with a target price of HK$3.8 backed by its impressive sales and steady rental.
Driven by favorable geographic exposure to Yangtze River Delta region (“YRD”), Redsun Properties’ contracted sales rose from RMB 25.7 billion in 2017 to RMB 86.5 billion in 2020, implying a CAGR of 50%. In 1H20, YRD accounts for 77% of the total contracted sales amount. As of June 2020, the Group had a landbank GFA of 18.37mn sqm, of which 55%, 18% and 27% of the landbank is located in Jiangsu, YRD ex. Jiangsu (mainly Zhejiang and Anhui), and other key cities in China.
ABC International believes that the “Property+ Commercial” model of Redsun Properties enhances the chances of acquiring land at a low cost. While developing residential properties, the Group also operates a range of commercial properties that include shopping malls, amusement parks, community entertainment centers, hotels and office buildings. Most of these commercial property buildings are adjacent to the Group’s residential property projects, providing ancillary services for residents and supporting prices of the residential property projects. For example, the average land cost of the Anqing Commercial and Residential Complex was RMB1,846/sqm with an expected gross profit margin of no less than 30%.
ABC International also believes that the Group has a strong recurring income. As of June 2020, the Group operated three Hong Yang Plazas located in Nanjing in Jiangsu, Changzhou in Jiangsu, and Yantai in Shandong, respectively. Among the 11 malls to commence operation after 2020, three are asset-heavy while the rest are developed under the asset-light model. The Group targets to open the three asset-heavy malls in 2022-23. Driven by the rising rent rates, the Group’s rental revenue increased at 57% CAGR from RMB166 million in 2017 to RMB411 million in 2019, and grew 14% YoY to RMB213mn in 1H20.
About Redsun Properties Group Limited (“Redsun Properties”) (stock code: 1996)
Redsun Properties Group Limited (“Redsun Properties” or “The Group”) is a leading comprehensive developer in China, focusing on the development of residential properties and the development, operation and management of commercial and comprehensive properties. The Group has established a steady regional leading position in Jiangsu Province by taking root in Nanjing, Jiangsu and Yangtze River Delta. Since the incorporation of Nanjing Redsun in 1999, Redsun Properties has worked in the sector of property development and sales for 20 years, established the
Hong Yang brand and received widespread recognition for the development capacity and industry position.
While developing residential properties, Redsun Properties also operates commercial complexes covering shopping malls, amusement parks and community centers, hotels and office buildings. Most of the commercial property buildings are adjacent to the Group’s residential property projects, providing ancillary services for the residents and also increasing the value of the Group’s residential property projects.
Redsun Properties is a constituent of the MSCI China Small Cap Index, Hang Seng Composite Index and Hang Seng Stock Connect Hong Kong Index.