房地产服务业：模型更新估值未变

1、Real Estate ServicesModel Updates, No Estimate ChangesNorth America Equity Research18 January 2019We are introducing our out-year estimates. We are making no changes to our current estimates.REITsAnthony Paolone, CFA AC(1-212) 622-6682 HYPERLINK mailto:anthony.paolone anthony.paoloneBloomberg JPMA P

2、AOLONE J.P. Morgan Securities LLCMichael W. Mueller, CFA(1-212) 622-6689 HYPERLINK mailto:michael.w.mueller michael.w.muellerJ.P. Morgan Securities LLCNikita Bely(1-212) 622-0695 HYPERLINK mailto:nikita.bely nikita.belyJ.P. Morgan Securities LLCHong Zhang(1-212) 622-6416 HYPERLINK mailto:hongliang.z

3、hang hongliang.zhangJ.P. Morgan Securities LLCPatrice Chen(1-212) 622-1893 HYPERLINK mailto:patrice.chen patrice.chenJ.P. Morgan Securities LLCSarah Tan(1-212) 622-1041 HYPERLINK mailto:sarah.tan sarah.tanJ.P. Morgan Securities LLCDhiraj K Kapgate(9122) 6157-3354 HYPERLINK mailto:dhiraj.kapgate dhir

4、aj.kapgateJ.P. Morgan India Private LimitedEquity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price ($) Rat Curing PrevCur Price TaEnd Daterget PrevEnd DateCBRE Group, IncCBRE US15,186.2244.55OWn/c54.00Dec-19n/cn/cCushman & WakefieldCWK US3,729.6516.77OWn/c21.00Dec-19n/cn/cJones Lang LaSalle

5、 IncJLL US6,480.74142.83OWn/c173.00Dec-19n/cn/cRealogy Holdings Corp.RLGY US2,193.5618.29UWn/c19.00Dec-19n/cn/cRE/MAX Holdings Inc.RMAX US1,169.2038.58UWn/c38.00Dec-19n/cn/cSource: Company data, Bloomberg, J.P. Morgan estimates. n/c = no change. All prices as of 18 Jan 19.See page 16 for analyst cer

6、tification and important disclosures, including non-US analyst disclosures.J.P. Morgan 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.

7、Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / CBRE Group, IncOverweightCompany DataPrice ($)44.55Date Of Price18-Jan-1952-week Range ($)50.43-37.45Market Cap ($ mn)15,186.22 Fiscal Year EndDecShares O/S (mn)341Market Cap ($ mn)15,186.2

8、2 Price Target ($)54.00Price Target End Date31-Dec-19CBRE Group, Inc (CBRE;CBRE US)FYE Dec2017A2018E2019E2020E2021EEPS - Recurring ($)Q1 (Mar)0.450.54A0.550.600.65Q2 (Jun)0.670.74A0.740.790.85Q3 (Sep)0.650.79A0.820.870.94Q4 (Dec)0.951.36FY2.733.183.283.503.78Bloomberg EPS FY ($)2.653.073

9、.383.633.87Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and Risks CBRE Group, Inc (Overweight; Price Target: $54.00) Investment ThesisWe rate shares of CBRE Overweight. We believe management is driving growththrough market share gains, and we see the outsourcin

10、g business continuing to deliver outsized growth. The result should be competitive bottom-line earnings growth for a best-in-class platform despite valuation that is at a discount to the S&P 500.ValuationCBRE trades at 13.6x our 2019 EPS estimate compared with peer JLL at 12.5x, CWK at 10.9x, and th

11、e S&P 500 at 15.8x. In terms of EBITDA, we calculate a 2019 EBITDA multiple of 8.7x for CBRE versus 8.2x for JLL, 8.2x for CWK, and the S&P 500 at 10.4x.Our Dec 2019 price target stays at $54/share. We utilize a discounted cash flow model to arrive at this price target. Our model takes two steps. We

12、 first forecast cash flow and dividends (none) to common shareholders through 2023 based on our bottom-up earnings model. We then assume a long-term cash flow growth rate of 4% and full payout of cash to shareholders thereafter. We discount this dividend stream back to the end of 2019 at a discount

13、rate of 10.0%. The discount rate is toward the high end of the range for our real estate stock coverage universe (7.75-10%) given CBREs more transaction-oriented income stream and higher beta.Risks to Rating and Price TargetAs an Overweight-rated stock, risks to our rating include items that could c

14、ause CBRE to underperform our coverage universe. First, we think service companies like CBRE could exhibit higher beta than our typical company under coverage. As such, a pullback in the market could disproportionately impact the stock. In addition, if liquidity in the commercial real estate markets

15、 deteriorates or if interest rates move notably higher, investment sales transactions could pull back, negatively impacting the companys capital markets businesses. On the leasing side, if job growth weakens or does not translate into incremental space demand, the companys leasing businesscould be i

16、mpacted. The company has global exposure, thus currency and/or regional trends could have an impact on the business.CBRE Group, Inc: Summary of FinancialsIncome Statement - AnnualFY16AFY17AFY18EFY19EIncome Statement - Quarterly1Q18A2Q18A3Q18A4Q18ETotal Revenue13,07218,62921,07722,246Total Revenue4,6

17、74A5,111A5,261A6,031Gross Profit3,9464,3254,8205,174Gross Profit1,054A1,153A1,162A1,452Operating Expense(9,125)(14,304)(16,257)(17,072)Operating Expense(3,620)A(3,959)A(4,099)A(4,579)Adjusted EBITDA1,5611,7171,8611,889Adjusted EBITDA348A439A463A610Interest Expense(145)(137)(107)(102)Interest Expense

18、(29)A(27)A(27)A(24)Depreciation and Amortization(253)(293)(334)(354)Depreciation and Amortization(79)A(84)A(85)A(86)Net Income7789301,0921,102Net Income186A253A270A383Earnings per share (EPS)2.192.733.183.28Earnings per share (EPS)0.54A0.74A0.79A1.11Adjusted EPS2.302.733.183.28Adjusted EPS0.54A0.74A

19、0.79A1.11Weighted average diluted shares338341344336Weighted average diluted shares343A344A344A345Dividends per share0.000.000.000.00Dividends per share0.00A0.00A0.00A0.00Balance Sheet and Cash Flow DataFY16AFY17AFY18EFY19ERatio AnalysisFY16AFY17AFY18EFY19ESales growth20.4%42.5%13.1%5.5%Total Assets

20、10,78011,71813,34113,493Adj. EBITDA growth10.5%10.0%8.4%1.5%Cash and cash equivalents763752860899Adj. EPS growth12.4%18.6%16.4%3.2%Total Debt3,8032,9103,4853,485Total Liabilities7,7227,5448,2058,205Gross Margin30.2%23.2%22.9%23.3%Net Debt3,0402,1592,6252,585EBITDA Margin11.9%9.2%8.8%8.5%Shareholder

21、Equity3,0144,1145,0765,229Tax Rate33.8%28.3%23.5%23.5%Net Margin6.0%5.0%5.2%5.0%Net debt/EBITDA1.4Net debt/capital (book)1.0Return on assets (ROA)7.1%8.3%8.7%8.2%Return on equity (ROE)27.2%26.1%23.8%21.4%Source: Company reports and J.P. Morgan estimates.Note: $ millions (except per

22、-share data).Fiscal year ends DecCushman & WakefieldOverweightCompany DataCushman & Wakefield PLC (CWK;CWK US)FYE Dec2017A2018E2019E2020E2021EPrice ($)16.77EPS - Recurring ($)Date Of Price18-Jan-19Q1 (Mar)(0.23)0.08A0.080.100.1452-week Range ($)19.45-13.25Q2 (Jun)0.370.46A0.400.450.50Market Cap ($ m

23、n)3,729.65Q3 (Sep)0.100.45A0.380.430.48Fiscal Year EndDecQ4 (Dec)1.200.600.690.750.81Shares O/S (mn)222FY1.251.701.541.721.92Price Target ($)21.00Price Target End Date31-Dec-19Source: Company data, Bloomberg, J.P. Morgan estimates.Investment Thesis, Valuation and Risks Cushman & Wakefield (Overweigh

24、t; Price Target: $21.00) Investment ThesisWe like the commercial real estate services space and CWKs positioning within it.We see the institutionalization of commercial real estate investing and the growth trends in global occupier outsourcing as being beneficial to the largest players in the space,

25、 of which CWK is one. We additionally see opportunity for CWK to grow faster than peers in the near term through recruiting, cost optimization, and in-fill acquisitions. As a result, we rate shares as Overweight.ValuationOur Dec 2019 price target stays at $21/share. In valuing the company we used a

26、discounted cash flow analysis, which incorporates a discount rate of 10.75% and a long-term free cash flow/share growth rate of 4.0%. Our discount rate is 25-75 bps higher than what we use for direct peers in order to account for CWKs higher financial leverage.Risks to Rating and Price TargetThe cyc

27、leCommercial real estate services is a cyclical business, particularly CWKs capital markets and leasing businesses. We think in a downturn these fee revenue streams can decline.Higher leverage than peersWe estimate CWKs net debt/EBITDA to be about 2.8x, which is higher than its direct peers. While w

28、e dont see debt re-financing or liquidity risks at this level, it nonetheless magnifies equity risk on the downside and could limit financial flexibility if a large acquisition opportunity were to arise.Competition for talent and clients is significantOverall, the business environment in commercial

29、real estate services is competitive. Top producing brokers remain heavily sought after, which could pose a risk if competitors lure employees away or if the market were such that commission splits move up. In addition, competition for client assignments is high, resulting in the needto not only inve

30、st heavily in people but in technology and systems in order to have the latest tools and information to help deliver solutions. Also, as the business moves to account-based services, fees could be pressured due to bundling.Stock overhangFollowing the IPO, the principal shareholders, which include TP

31、G (Texas Pacific Group), PAG Asia Capital, and OTPP (Ontario Teachers Pension Plan), control roughly two-thirds of the shares outstanding. The lockup of the shares runs for 180 days post the IPO on August 2, or until January 29, 2019, after which the shares are tradable. While we view the sponsor qu

32、ality here as high and have historically seen discipline in terms of exiting positions over time, the expectation that a large share sell-down might occur could weigh on the stock.Sizable addbacks to get to “adjusted” EBITDA and EPSFollowing the IPO, there remains a variety of one-time, non-comparab

33、le, or IPO- related items mainly on the cost side that will be added to arrive at adjusted EBITDA and adjusted EPS. These addbacks should dissipate significantly through 2019 but in the meantime could be seen as reducing the quality of those metrics.Cushman & Wakefield: Summary of FinancialsIncome S

34、tatement - AnnualFY16AFY17AFY18EFY19EIncome Statement - Quarterly1Q18A2Q18A3Q18A4Q18ETotal Revenue6,2166,9247,9848,403Total Revenue1,768A1,974A2,076A2,166Gross Profit1,1391,2841,6131,940Gross Profit294A410A389A520Operating Expense(5,077)(5,640)(6,372)(6,463)Operating Expense(1,473)A(1,565)A(1,687)A(

35、1,647)Adjusted EBITDA475528656697Adjusted EBITDA75A170A179A232Interest Expense(172)(183)(229)(170)Interest Expense(44)A(52)A(93)A(40)Depreciation and Amortization(261)(271)(285)(290)Depreciation and Amortization(70)A(72)A(69)A(72)Net Income(450)(221)(122)123Net Income(92)A(32)A(49)A51Earnings per sh

36、are (EPS)(3.18)(1.53)(0.67)0.55Earnings per share (EPS)(0.63)A(0.20)A(0.25)A0.23Adjusted EPS1.061.251.701.54Adjusted EPS0.08A0.46A0.45A0.60Weighted average diluted shares141144182222Weighted average diluted shares145A164A198A222Dividends per share0.000.000.000.00Dividends per share0.00A0.00A0.00A0.0

37、0Balance Sheet and Cash Flow DataFY16AFY17AFY18EFY19ERatio AnalysisFY16AFY17AFY18EFY19ESales growth-11.4%15.3%5.2%Total Assets5,6825,7986,4296,745Adj. EBITDA growth-11.3%24.1%6.3%Cash and cash equivalents3824069031,054Adj. EPS growth-18.0%35.9%(9.2%)Total Debt2,6602,8442,5502,523Total Liabilities5,0

38、925,2944,8874,859Gross Margin18.3%18.5%20.2%23.1%Net Debt2,2782,4381,8401,663EBITDA Margin7.6%7.6%8.2%8.3%Shareholder Equity5905041,5431,886Tax Rate(5.7%)(35.3%)(22.4%)22.0%Net Margin2.4%2.6%3.9%4.1%Net debt/EBITDA4.797388374.613739592.805851032.3841008Net debt/capital (book)0.9Return on as

39、sets (ROA)5.3%3.1%5.1%5.2%Return on equity (ROE)50.8%32.9%30.3%20.0%Source: Company reports and J.P. Morgan estimates.Note: $ millions (except per-share data).Fiscal year ends DecOverweightJones Lang LaSalleIncJones Lang LaSalle Inc (JLL;JLL US)Company DataFYE Dec2017A2018E2019E2020E2021EPrice ($)14

40、2.83EPS Reported ($)Date Of Price18-Jan-19Q1 (Mar)0.370.97A0.920.991.1252-week Range ($)178.75-Q2 (Jun)2.172.26A2.492.672.90119.79Q3 (Sep)2.213.02A2.762.923.17Market Cap ($ mn)6,480.74Q4 (Dec)4.544.965.225.596.04Fiscal Year EndDecFY9.3111.2211.3812.1313.17Shares O/S (mn)45Bloomberg EPS FY ($)8.3511.

41、1611.2512.1312.29Price Target ($)173.00Price Target End Date31-Dec-19Source: Company data, Bloomberg, J.P. Morgan estimates. Estimates are Adjusted EPS excluding one-time itemsInvestment Thesis, Valuation and RisksJones Lang LaSalle Inc (Overweight; Price Target: $173.00)Investment ThesisWe believe

42、JLL should continue to see its earnings benefit from global commercial real estate fundamentals being in decent shape, the continued institutionalization of CRE that should drive benefits to the largest service providers, and the trend of outsourcing the corporate real estate function to large CRE s

43、ervices organizations like JLL. We thus rate the shares Overweight.ValuationJLL trades at 12.5x our 2019 EPS estimate compared with peer CBRE at 13.6x, CWK at 10.9x, and the S&P 500 at 15.8x. In terms of EBITDA, we calculate a 2019 EBITDA multiple of 8.2x for JLL versus 8.7x for CBRE, 8.2x for CWK,

44、and the S&P 500 at 10.4x.Our December 2019 price target stays at $173/share. Our price target is derived from a dividend discount model using our bottom-up earnings model for specific inputs for the next several years followed by big-picture growth and payout assumptions for the long term (perpetuit

45、y). We assume that after 2023 100% of capital is returned to shareholders in the form of a dividend (100% long-term payout). For growth, we assume long-term growth of 4%, which is derived by assuming that the addressable CRE market increases 1-2% annually and inflation in price increases 2-3% annual

46、ly. We assume no margin expansion or market share gains beyond the next five years.We use a discount rate of 10.50% in our model; by way of comparison, we currently assume a range of discount rates of 9.00-15.00% for the five service companies in our coverage universe (CBRE, CWK, JLL, RLGY, RMAX).Ri

47、sks to Rating and Price TargetAs an Overweight-rated stock, the risk is that JLL does not outperform our coverage universe. As we see it, some factors that could cause this include 1) higher than expected costs that could impugn margins, potentially from technology spend or competition for producers

48、, 2) regional economic weakness that could dampen CRE fundamentals, 3) a slowdown in investment sales resulting from rising rates or ashock to capital markets, 4) outflows from the companys investment management business, and 5) fee compression from competing for assignments.Jones Lang LaSalle Inc:

49、Summary of FinancialsIncome Statement - AnnualFY16AFY17AFY18EFY19EIncome Statement - Quarterly1Q18A2Q18A3Q18A4Q18ETotal Revenue12,99114,45316,09917,182Total Revenue3,555A3,904A3,970A4,670Gross Profit-Gross Profit-Operating Expense-Operating Expense-Adjusted EBITDA679771891902Adjusted EBITDA108A194A2

50、34A355Interest Expense(45)(56)(53)(50)Interest Expense(14)A(14)A(12)A(13)Depreciation and Amortization(142)(167)(179)(186)Depreciation and Amortization(42)A(46)A(43)A(48)Net Income346280517518Net Income43A110A137A228Earnings per share (EPS)8.389.3111.2211.38Earnings per share (EPS)0.97A2.26A3.02A4.9

51、6Adjusted EPS8.389.3111.2211.38Adjusted EPS0.97A2.26A3.02A4.96Weighted average diluted shares46464646Weighted average diluted shares46A46A46A46Dividends per share0.000.000.450.54Dividends per share0.00A0.00A0.00A0.44Balance Sheet and Cash Flow DataFY16AFY17AFY18EFY19ERatio AnalysisFY16AFY17AFY18EFY1

52、9ESales growth151.6%11.3%11.4%6.7%Total Assets7,6299,2549,82710,206Adj. EBITDA growth(8.4%)13.4%15.6%1.3%Cash and cash equivalents259268500774Adj. EPS growth(16.5%)11.1%20.5%1.5%Total Debt1,268753984884Total Liabilities4,8085,8726,0465,946Gross Margin-Net Debt1,009485484110EBITDA Margin5.2%5.3%5.5%5

53、.3%Shareholder Equity2,8153,3783,7814,260Tax Rate25.4%47.8%24.7%24.5%Net Margin2.9%2.9%3.2%3.1%Net debt/EBITDA0.1Net debt/capital (book)0.0Return on assets (ROA)5.5%5.0%5.4%5.3%Return on equity (ROE)13.8%13.8%14.4%13.1%Source: Company reports and J.P. Morgan estimates.Note: $ milli

54、ons (except per-share data).Fiscal year ends DecRealogy Holdings Corp.UnderweightCompany DataRealogy Holdings Corp. (RLGY;RLGY US)FYE Dec2017A2018E2019E2020E2021EPrice ($)18.29EPS Reported ($)Date Of Price18-Jan-19Q1 (Mar)(0.20)(0.51)A(0.41)(0.41)(0.40)52-week Range ($)28.07-14.25Q2 (Jun)0.780.96A1.

55、041.171.28Market Cap ($ mn)2,193.56Q3 (Sep)0.690.83A0.901.031.13Fiscal Year EndDecQ4 (Dec)1.880.19Shares O/S (mn)120FY3.111.381.621.962.19Price Target ($)Price Target End Date19.0031-Dec-19Adj. EPS FY ($)Bloomberg EPS FY ($)1.561.531.571.521.621.761.961.972.19-Source: Company data, Bloom

56、berg, J.P. Morgan estimates.Investment Thesis, Valuation and RisksRealogy Holdings Corp. (Underweight; Price Target: $19.00)Investment ThesisThe U.S. housing market has slowed, and this is having an impact on the backdrop for RLGYs business. In addition, the competitive landscape remains very intens

57、e whereby RLGY must contend with other brokerage platforms aggressively pursuing agents and franchisees as well as technology-driven concepts trying to change the way residential real estate is transacted. We think the CEO is taking appropriate measures to combat these challenges, but nonetheless th

58、is results in an outlook that is cloudy and puts pressure on EBITDA. We thus prefer other stocks in our coverage universe at this time.ValuationWe calculate that RLGY trades at 11.3x our 2019 adjusted EPS forecast, which is roughly a 28% discount to the S&P 500 multiple on 2019 earnings. With regard

59、 to free cash flow multiples, we estimate that RLGY trades at 6.7x our 2019E tax adjusted free cash flow (15.0% yield). We estimate that on an EV/EBITDA basis, RLGY trades at 8.1x 2019E operating EBITDA.Our Dec 2019 price target stays at $19/share. In deriving our price target we use a combination o

60、f free cash flow, DCF, sum-of-the-parts valuation, and relative value. We estimate a value of $22/share using our sum-of-the-parts approach, $16 using the P/E multiple, $14 using EV/EBITDA valuation, $25 using the tax-affected FCF yield valuation, and $21 using the dividend discount model. Blended,