Hangzhou Binjiang Real Estate Group has unveiled its first-half 2024 earnings forecast, signaling substantial profit expansion fueled by increased project completions. Maintaining its position among China's top-ten developers, the company demonstrates aggressive investment momentum with over 60% capital allocation to land acquisitions, primarily concentrated in Hangzhou. Notably, financing costs have plummeted to levels rivaling state-owned enterprises.
Given persistent headwinds in property sales, we revise our earnings projections downward. Anticipated net profits attributable to shareholders for 2025-2027 now stand at RMB2.94 billion, RMB3.27 billion, and RMB3.42 billion (previously RMB3.83 billion, RMB4.41 billion, and RMB5.01 billion), translating to EPS of RMB0.94, RMB1.05, and RMB1.10 respectively. Current valuations reflect P/E multiples of 10.6x, 9.5x, and 9.1x. Strategic landbank focus on premium Yangtze River Delta locations bolsters our confidence in profit recovery prospects, warranting retention of our "Buy" recommendation.
First-half 2025 forecasts project shareholder net profits between RMB1.633-1.982 billion, marking 40%-70% annual growth. Non-GAAP net profits should reach RMB1.637-1.987 billion, surging 44.8%-75.8%. Basic EPS is estimated at RMB0.52-0.64 per share. This acceleration stems primarily from scaled-up project deliveries: 17 developments were completed during the period, with 15 situated in Hangzhou and two elsewhere.
Sales performance remains resilient despite market turbulence. First-half 2025 contracted sales totaled RMB52.75 billion (-9.4% YoY), securing tenth industry-wide while leading private enterprises. CRIC data confirms Hangzhou dominance with RMB28.7 billion full-caliber sales and sustained market leadership. Land acquisition intensity hit 63% through 16 Hangzhou and Jinhua parcels valued at RMB33.3 billion, generating over RMB54.2 billion in developable inventory. Hangzhou accounted for RMB30.7 billion of spending, adding 840,000+ sqm reserves. By end-2024, landbank reached 9.976 million sqm gross floor area—70% concentrated in Hangzhou—reflecting premium geographic allocation.
Public financing channels remain robust. Two two-year medium-term notes and two one-year commercial papers raised RMB2.3 billion at 2.5%-3.8% coupons during the period. Comprehensive financing costs compressed to 3.1% by mid-2025 (from 3.4% at end-2024), achieving parity with central SOE borrowing levels.
Key risks include: Slower-than-anticipated sales recovery, weaker Hangzhou market absorption, and execution delays in land acquisition strategies.
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