Under a low base, H1's operating performance was impressive, and net profit increased by 169.20%. In the first half of 2021, the company achieved operating income of 2,620 million yuan, an increase of 430.03% over the previous year; realized net profit of 200 million yuan, an increase of 169.20% over the previous year; realized net profit of 191 million yuan after deducting non-return to the mother, an increase of 603.48% over the previous year; and achieved diluted earnings of 0.17 yuan per share, an increase of 183.33% over the previous year. During the reporting period, the three expenses accounted for 7.57% of operating income, down 30.8 percentage points from the same period last year.
Real estate revenue accounts for the main revenue structure, and H1 has no new land storage. By industry, real estate sales are still the main contributor, achieving revenue of 2,534 billion yuan, accounting for 96.73% of operating income, an increase of 745.86% over the previous year, and gross margin of 16.55%, a year-on-year decrease of 22.15 percentage points. During the reporting period, the company had no new land reserves. The remaining undeveloped land reserves were concentrated in Yanjiao, Hebei, with a total construction area of 414,800 square meters.
The cultural business is recovering at the same time that the industry is recovering, and the two projects are expected to be performed within the year. In the first half of 2021, the revenue of the cultural and performing arts sector was 29 million yuan, accounting for 1.11%, a sharp drop of 77.41% over the previous year, mainly due to a decrease in project production revenue. The business situation of the company's series of cultural tourism and performing arts projects has basically recovered at the same time as the industry. The cumulative number of visitors received recovered to 70% in the same period in 2019, an increase of 456.8% over the same period in 2020; box office revenue recovered to 65% in the same period in 2019, an increase of 519.2% over 2020. During the reporting period, the company made every effort to promote the creation and production of the “Most Memories of Shaoshan Chong” and “Impression of Taiji” projects, which are expected to premiere within the year. At the same time, the company reached in-depth strategic cooperation with Hunan Radio and Television and its subsidiary Mango TV, and will carry out all-round cooperation in content, cultural tourism, etc.
Affected by the revenue structure, gross margin and net interest rate have both declined. The company's total assets were 7.704 billion yuan, a year-on-year decrease of 49.99%; Guimu's net assets were 4.644 billion yuan, a year-on-year decrease of 20.45%. The company's gross margin was 16.70%, down 25.37 percentage points from the previous year; the net profit margin was 7.65%, down 7.41 percentage points from the previous year. Mainly due to the decline in revenue from cultural businesses with high gross margins, the real estate business was affected by the housing delivery cycle, and carry-over income from some projects increased compared to the same period last year. In terms of debt structure, the company's balance ratio was 43.51%, down 19.83 percentage points from the previous year; the net debt ratio was 0.64%; the balance ratio after excluding contract liabilities and advance accounts was 31.89%, down 15 percentage points from the previous year; monetary capital was 1,444 billion yuan, down 52.40% from the previous year
Investment advice: Maintain a “neutral” rating. We forecast the company's total revenue for 2021 and 2022 to be about 5.450 billion yuan and 5.918 billion yuan respectively, net profit attributable to parent company owners to be 409 million yuan and 463 million yuan, corresponding to EPS of 0.33 yuan and 0.38 yuan respectively. Based on the company's closing price of 3.16 yuan on August 18, 2021, the corresponding PE for 2021 and 2022 was 9.47 times and 8.35 times. We gave the company 9-10XPE in 2021, with a reasonable value range of 3.00 to 3.34 yuan, maintaining “neutrality”
ratings. Risk warning: 1) Sales and settlement of the real estate development business fell short of expectations; 2) the promotion of the company's cultural business fell short of expectations.
