Events:
The company released a semi-annual report that 2021H1's total revenue was 16.07 billion yuan, up 44.1% from the same period last year, and its net profit was 2.01 billion yuan, up 92.4% from the same period last year. The contract sales are about $55.77 billion and the contract sales area is about 3.22 million square metres. the average contract price is about $17320 per square metre. During the reporting period, the main business grew in high quality, the acquisition of land was cautious, and financing costs were further reduced.
Investment Summary:
Contract sales reached 55.7 billion yuan in the first half of the year and are expected to exceed 100 billion yuan for the whole year. In the first half of the year, the contract sales price reached 17320 yuan per square meter, which increased significantly compared with the average sales price of 14044 yuan in 2020. The sales area in the first half of the year reached 3.22 million square meters, compared with 6.92 million square meters in 2020. The company's sales are more driven by price increases, and the overall sales are sound.
The net interest rate increased by 3.1 percentage points. 2021H1's gross profit margin was 21.1%, a year-on-year reduction of 1.7pct. The net interest rate is 12.5%, an increase of 3.1pct over the same period last year. The increase in net interest rate was due to a decrease of 7 yuan in financial costs and 104 million yuan in other expenses, an increase in the company's share of associates from a loss of 36 million yuan up to 2020H1 to 191 million yuan as at 2021H, and an increase in fair value income from investment properties by 326 million yuan.
If you take the land carefully, there will be plenty of land storage. In the first half of 2021, the company added 17 pieces of land, the planned construction area was 2.218 million square meters, the average land acquisition cost was 6226 yuan per square meter, and the total equity land price was 8.897 billion yuan. Compared with the sales of 55.77 billion yuan in the first half of the year, the proportion of land acquisition cost to sales is much less than 40%. The new 17 sites cover 11 first-tier and strong second-tier key cities, including Beijing, Chongqing, Ningbo, Zhengzhou and Quanzhou, mainly in the Yangtze River Delta, southeast and Pearl River Delta. As of 2021H1, the company has a total land reserve area of 33.07 million square meters, of which 97.9% are located in strong second-tier and core third-tier cities.
The new rules on land premium rate in the second half of the year are expected to optimize the company's soil storage structure. On the afternoon of August 10, 2021, the Tianjin Bureau of Planning and Natural Resources issued a supplementary announcement on the listing and transfer of the right to the use of state-owned construction land in Tianjin. The maximum premium rate was reduced to no more than 15%. After reaching the peak, the lottery mechanism was activated. The company took the land cautiously in the first half of the year, laying the foundation for the new planning and optimization of soil storage structure in the second half
The "three red lines" zero step on the line, all of which are further optimized. As of 2021H1, the company's net debt ratio was 75.9%, cash short-term loan ratio was 1.5, and the asset-liability ratio excluding advance receipts was 68.3%. All meet the "three red lines" policy green file requirements, compared with the end of 2020 are further improved, the company's net debt ratio is 75.3%, cash short-term loan ratio is 1.4, excluding advance payments, the asset-liability ratio is 69%.
Comprehensive financing costs have been further reduced. As of 2021H1, the company's weighted average debt cost fell to 6.95%, down 0.52 percentage points from 7.47% at the end of 2020. This was mainly due to a 13.6 percentage point increase in the share of low-cost bank loans from the end of 2020 to 66.3%.
The company's diversified layout, self-owned property and hotel management plate make a significant contribution. In February 2021, the company's first five-star hotel, Fuqing Sheraton, officially opened. In April, Jinhui District 8, the company's second commercial project, launched investment promotion. The fair value income of the company's 2021H1 investment property reached 501 million yuan, an increase of 185.7% compared with 175 million yuan of 2020H1.
Investment strategy: under the current "three red lines", "two concentration" and other industry policies, Jinhui Holdings adopts the strategy of steady development, the "three red lines" are all up to the standard and further improved at the same time, and the proportion of land cost to sales is far less than 40%. Diversified layout improves the company's overall net profit margin. We estimate that the operating income of the company in 2021 and 2023 is 46.9 billion yuan, 58.4 billion yuan and 67.5 billion yuan respectively, and the net profit belonging to the shareholders of the listed company is 4.3 billion yuan, 5.3 billion yuan and 6.1 billion yuan respectively, and the earnings per share are 1.07,1.31,1.52 yuan respectively, and the corresponding PE is 3.52,2.87,2.47 times respectively. Give a "buy" rating.
Risk tips: the risk of sales falling short of expectations, the risk of real estate policy regulation and control, and the risk of repeated epidemic.