SEHK:405

Stock Analysis Report

Yuexiu Real Estate Investment Trust

Executive Summary

Yuexiu Real Estate Investment Trust (“Yuexiu REIT”) was listed on the Hong Kong Stock Exchange of Hong Kong Limited on 21 December 2005 and is the first listed real estate investment trust only investing in properties in the People’s Republic of China (the “PRC”) in the world.

Rewards

Earnings grew by 4.3% over the past year

Pays a reliable dividend of 5.9%

Risk Analysis

Earnings are forecast to decline by an average of -43.1% per year for the next 3 years

Dividend of 5.9% is not well covered by earnings

Large one-off items impacting financial results

Shareholders have been diluted in the past year



Snowflake Analysis

Average dividend payer with acceptable track record.

Share Price & News

How has Yuexiu Real Estate Investment Trust's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: 405 has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

-0.9%

405

-3.6%

HK REITs

-4.3%

HK Market


1 Year Return

-1.1%

405

-3.9%

HK REITs

-0.7%

HK Market

Return vs Industry: 405 exceeded the Hong Kong REITs industry which returned -2.7% over the past year.

Return vs Market: 405 matched the Hong Kong Market which returned -0.7% over the past year.


Shareholder returns

405IndustryMarket
7 Day-0.9%-3.6%-4.3%
30 Day-0.2%0.3%-0.2%
90 Day1.3%-2.6%4.1%
1 Year4.8%-1.1%0.3%-3.9%3.0%-0.7%
3 Year49.1%23.4%51.7%31.9%20.2%8.0%
5 Year78.9%28.9%70.3%33.5%18.7%-1.1%

Price Volatility Vs. Market

How volatile is Yuexiu Real Estate Investment Trust's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Yuexiu Real Estate Investment Trust undervalued compared to its fair value and its price relative to the market?

13.53x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: 405 (HK$5.29) is trading above our estimate of fair value (HK$2.84)

Significantly Below Fair Value: 405 is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: 405 is poor value based on its PE Ratio (13.5x) compared to the REITs industry average (9.9x).

PE vs Market: 405 is poor value based on its PE Ratio (13.5x) compared to the Hong Kong market (10.5x).


Price to Earnings Growth Ratio

PEG Ratio: 405's earnings are forecast to decline next year, so we can't calculate its PEG ratio.


Price to Book Ratio

PB vs Industry: 405 is overvalued based on its PB Ratio (1x) compared to the HK REITs industry average (0.5x).


Next Steps

Future Growth

How is Yuexiu Real Estate Investment Trust forecast to perform in the next 1 to 3 years based on estimates from 4 analysts?

-43.1%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: 405's earnings are forecast to decline over the next 3 years (-43.1% per year).

Earnings vs Market: 405's earnings are forecast to decline over the next 3 years (-43.1% per year).

High Growth Earnings: 405's earnings are forecast to decline over the next 3 years.

Revenue vs Market: 405's revenue (4.9% per year) is forecast to grow slower than the Hong Kong market (10.2% per year).

High Growth Revenue: 405's revenue (4.9% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: 405's Return on Equity is forecast to be low in 3 years time (4.2%).


Next Steps

Past Performance

How has Yuexiu Real Estate Investment Trust performed over the past 5 years?

7.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: 405 has a large one-off gain of CN¥1.4B impacting its June 30 2019 financial results.

Growing Profit Margin: 405's current net profit margins (52.7%) are higher than last year (52.7%).


Past Earnings Growth Analysis

Earnings Trend: 405's earnings have grown by 7.7% per year over the past 5 years.

Accelerating Growth: 405's earnings growth over the past year (4.3%) is below its 5-year average (7.7% per year).

Earnings vs Industry: 405 earnings growth over the past year (4.3%) exceeded the REITs industry -44.3%.


Return on Equity

High ROE: 405's Return on Equity (6.8%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Yuexiu Real Estate Investment Trust's financial position? (This company is analysed differently as a bank or financial institution)


Financial Position Analysis


Debt to Equity History and Analysis


Balance Sheet

Inventory Level: 405 has a high level of physical assets or inventory.

Debt Coverage by Assets: 405's debt is not covered by short term assets (assets are 0.1x debt).


Financial Institutions Analysis

Asset Level: 405's level of assets compared to its equity is low.

Allowance for Bad Loans: Insufficient data to determine if 405 has a sufficient allowance for bad loans.

Low Risk Liabilities: 405 reports no customer deposits, loans are made up entirely of externally borrowed funds.

Loan Level: Insufficient data to determine if 405 has an acceptable proportion of non-loan assets held.

Low Risk Deposits: 405 has advanced significantly more loans than the customer deposits it holds.

Level of Bad Loans: Insufficient data to determine if 405 has an appropriate level of bad loans.


Next Steps

Dividend

What is Yuexiu Real Estate Investment Trust's current dividend yield, its reliability and sustainability?

5.88%

Current Dividend Yield


Dividend Yield vs Market

company5.9%marketbottom25%2.2%markettop25%6.2%industryaverage4.5%forecastin3Years6.2%

Current dividend yield vs market & industry

Notable Dividend: 405's dividend (5.9%) is higher than the bottom 25% of dividend payers in the Hong Kong market (2.17%).

High Dividend: 405's dividend (5.9%) is low compared to the top 25% of dividend payers in the Hong Kong market (6.02%).


Stability and Growth of Payments

Stable Dividend: 405's dividends per share have been stable in the past 10 years.

Growing Dividend: 405's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its high payout ratio (101.2%), 405's dividend payments are not well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: 405's dividends in 3 years are forecast to be thoroughly covered by earnings (0.07% payout ratio).


Next Steps

Management

What is the CEO of Yuexiu Real Estate Investment Trust's salary, the management and board of directors tenure and is there insider trading?

6.0yrs

Average management tenure


CEO

Deliang Lin (49yo)

6yrs

Tenure

0

Mr. Deliang Lin serves as Chief Executive Officer of Yuexiu Reit Asset Management Limited - Manager of Yuexiu Real Estate Investment Trust and served as its Deputy Chief Executive Officer. Mr. Lin has been ...


Management Age and Tenure

6.0yrs

Average Tenure

49yo

Average Age

Experienced Management: 405's management team is seasoned and experienced (6 years average tenure).


Board Age and Tenure

3.3yrs

Average Tenure

49.5yo

Average Age

Experienced Board: 405's board of directors are considered experienced (3.3 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyHK$64,128,79729 Aug 19
Yuexiu Property Company Limited
EntityCompany
Shares12,238,329
Max PriceHK$5.24
BuyHK$71,896,17819 Mar 19
Yuexiu Property Company Limited
EntityCompany
Shares13,167,795
Max PriceHK$5.46

Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.1%.


Management Team

  • Terry Kwan (57yo)

    Chief Financial Officer

    • Tenure: 13yrs
  • Tat Fung Yu

    Secretary & Compliance Manager of Yuexiu REIT Asset Mgmt Ltd

    • Jiuzhou Cheng (47yo)

      Deputy CEO & Executive Director

      • Tenure: 3.3yrs
    • Ou Haijing

      General Manager of Asset Management Department - Yuexiu REIT Asset Management Limited

      • Jing Li

        General Manager of Project Development Department - Yuexiu REIT Asset Management Limited

        • Deliang Lin (49yo)

          CEO & Chairman

          • Tenure: 6yrs
        • Bihong Liu

          GM of Internal Audit Dept & Dy GM of Compliance Dept - Yuexiu REIT Asset Mgmt Ltd

          • Patrick Cheng

            Deputy GM of Investment & Investor Relations


            Board Members

            • Derek Chan (56yo)

              Independent Non-Executive Director

              • Yuk Tong Cheung (61yo)

                Independent Non-Executive Director

                • Tenure: 5.3yrs
              • Danqing Liang (46yo)

                Non-Executive Director

                • Tenure: 1.4yrs
              • Jiuzhou Cheng (47yo)

                Deputy CEO & Executive Director

                • Tenure: 3.3yrs
              • Deliang Lin (49yo)

                CEO & Chairman

                • Tenure: 6yrs
              • Feng Li (50yo)

                Non-Executive Director

                • Tenure: 7.6yrs
              • Xiaoou Chen (49yo)

                Independent Non-Executive Director

                • Tenure: 3.3yrs
              • Brian Chan (64yo)

                Independent Non-Executive Director

                Company Information

                Yuexiu Real Estate Investment Trust's company bio, employee growth, exchange listings and data sources


                Key Information

                • Name: Yuexiu Real Estate Investment Trust
                • Ticker: 405
                • Exchange: SEHK
                • Founded: 2005
                • Industry: Diversified REITs
                • Sector: Real Estate
                • Market Cap: HK$16.895b
                • Shares outstanding: 3.21b
                • Website: https://www.yuexiureit.com

                Number of Employees


                Location

                • Yuexiu Real Estate Investment Trust
                • Yue Xiu Building
                • 17th Floor, Flat B
                • Wanchai
                • Hong Kong

                Listings

                TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
                D3NDB (Deutsche Boerse AG)YesTrust UnitsDEEURDec 2005
                405SEHK (The Stock Exchange of Hong Kong Ltd.)YesTrust UnitsHKHKDDec 2005
                YUXX.FOTCPK (Pink Sheets LLC)YesTrust UnitsUSUSDDec 2005

                Biography

                Yuexiu Real Estate Investment Trust (“Yuexiu REIT”) was listed on the Hong Kong Stock Exchange of Hong Kong Limited on 21 December 2005 and is the first listed real estate investment trust only investing in properties in the People’s Republic of China (the “PRC”) in the world. Yuexiu REIT focuses on office, retail and other commercial purposes, strives for properties which can bring considerable cash flows and returns and identifies business opportunities for achieving higher revenue growth through the optimization of its operations. The current property portfolio comprises eight high quality properties, namely White Horse Building, Fortune Plaza, City Development Plaza, Victory Plaza, Guangzhou International Finance Center in Guangzhou, Yuexiu Tower in Shanghai, Wuhan Properties in Wuhan and Victory Business Centre in Hangzhou, with a total area of ownership of approximately 969,488 square metres. All properties are located in the central business district (“CBD”) of Guangzhou, Shanghai, Wuhan and Hangzhou respectively. The categories of the properties include professional clothing market, Grade-A offices, multiple functional commercial offices, retail business, hotel and serviced apartments etc. The Manager of Yuexiu REIT is Yuexiu REIT Asset Management Limited (“Manager”). Yuexiu REIT is managed by an experienced professional team with extensive experience in real estate management, asset management and the securities market and brings long-term and steady investment incomes to the Unitholders (“Unitholders”) of Yuexiu REIT through actively managing its assets and expanding its operations. While the real estate investment trust market is flourishing, the Manager is committed to becoming a professional asset management institution with a focus on the PRC commercial property market, continuing asset appreciation capability, commercial operation capability, capital operation capability and a leading position in the industry. 


                Company Analysis and Financial Data Status

                All financial data provided by Standard & Poor's Capital IQ.
                DataLast Updated (UTC time)
                Company Analysis2020/01/25 12:53
                End of Day Share Price2020/01/24 00:00
                Earnings2019/06/30
                Annual Earnings2018/12/31


                Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.