Core ideas:

The number of projects delivered and settled by Rongsheng Development increased in the first half of 2021, and the enterprise's operating income increased by 30.85% to 34.22 billion yuan over the same period last year. However, the increase in gross profit and net profit was not obvious, with a gross profit of 8.84 billion yuan, an increase of 8.0% over the same period last year, and a net profit of 2.91 billion yuan, an increase of 0.5% over the same period last year. Compared with mid-2020, gross margin fell 5.5 percentage points to 25.8 per cent in mid-2021, and net profit margin fell 2.6 percentage points to 8.5 per cent. This reflects that although the scale of the enterprise has increased, its profitability has not improved with it. We believe that the profitability of real estate enterprises is relatively declining, first, the real estate regulation and control policy is more strict, and the profit space of real estate development is narrowing. Second, enterprises expand from North China to other regions, in the initial stage, the competitive advantage of enterprises may not be obvious enough, and their profitability is relatively weak.