21H1's homing net profit is-14.0% compared with the same period last year, and the decline in settlement quality affects earnings performance. On August 19, 2021, the company disclosed its semi-annual report of 2021. 21H1 achieved revenue of 34.22 billion, + 30.9% compared with the same period last year, and realized home net profit of 2.53 billion,-14.0% compared with the same period last year. The decline in settlement quality affects profit performance. In view of the uncertainty of sales in third-and fourth-tier cities and the continued decline in industry profit margins, we reduce the company's revenue growth and gross profit margin, and estimate EPS of 1.80,1.87,2.02 yuan (3.04,3.63 yuan before 21-22 years) in 2021-2023. With reference to the comparable company's 2021 forecast PE average 4.1 times (Wind consensus expectations), taking into account the fundamental risks of third-and fourth-tier cities, we believe that the company 2021 reasonable PE valuation of 3.3x, the target price of 5.94 yuan (the previous value of 10.12-11.39 yuan), maintain the "buy" rating.
The acceleration of settlement, the decline in gross profit margin and the profit and loss diversion of minority shareholders led to a slowdown in earnings. 21H1's real estate settlement area was + 56.3% year-on-year to 331.5 million square meters, and settlement income was + 39.5% to 31.58 billion year-on-year. Profit growth is lower than revenue growth due to: 1, 21H1 settlement gross profit margin continued to decline, year-on-year-5.5pct to 25.8%, low equity ratio project centralized settlement, minority shareholders' profit and loss share of net profit increased to 12.8% compared with the same period last year. The outstanding sales in the 21H1 table are + 3.4% to 86.59 billion compared with the beginning of the year, covering 121% of the annual revenue in 2020, laying a resource foundation for the steady growth of settlement for the whole year.
Real estate development to remove inventory and recover money, property leads the development of diversified industries, 21H1 strengthens inventory removal and sales payback, achieving contracted sales of 59.92 billion, + 24.3% compared with the same period last year, and achieving the annual sales target of 46.1% of 130 billion. The completion rates of start-up, opening and delivery of houses in the 21H1 travel plate are all ≥ 100%; the industrial park plate insists on revenue and expenditure, with a steady pace of operation; on August 9, the performance forecast of its property management platform Rongwanjia shows that thanks to the expansion of management scale, the rise of value-added services and the improvement of group operating efficiency, the net profit of 21H1 Rongwanjia is expected to increase by no less than 110% compared with the same period last year.
Land investment shrinks with three red lines continuing the yellow line.
21H1 land investment focuses on Hangzhou, Xuzhou, Wuhu, Guangzhou and other weak areas, land acquisition expenditure of 12.34 billion, year-on-year-40.7%, investment intensity 20.6%, compared with 2020-1.6pct. The land storage area of the company at the end of the report period is 3741.3 square meters, which is-2.5% higher than that at the beginning of the year. We expect to meet the development needs of the company for 2-3 years.
At the end of the reporting period, the company calculated the cash short-debt ratio of 116%, the net debt ratio from the beginning of the year-13.7pct to 66.5%, and the asset-liability ratio deducting accounts received in advance from the beginning of the year-3.0pct to 70.8%. Sales smooth superimposed investment convergence, the company's three red lines continue to move towards green (deducting the asset-liability ratio of accounts received in advance exceeds the standard 0.8pct).
Continuously increase holdings to boost development confidence and maintain "buy" rating
Based on the confidence of the company's future development and the recognition of the management, after the major shareholder Rongsheng holding subsidiary Rongsheng Venture Capital increased its stake in the company by 277 million yuan from February to August 2021, it was announced on August 3 that it planned to continue to increase its holdings by no less than 100 million yuan in the next six months. In view of the uncertainty of the elimination of sales in third-and fourth-tier cities and the continued decline in industry profit margins, we reduce the company's revenue growth and gross profit margin, and we forecast the company's EPS of 1.80,1.87,2.02 yuan in 2021-2023 to maintain its "buy" rating.
Risk tips: industry policy risks; industry downside risks; sales uncertainty in third-and fourth-tier cities.