The company maintains a low-debt, high-yield development model and is highly resistant to risks. 2021H1 has revenue of 1.69 billion (-8.2%), net profit of 620 million (-4.1%), net interest rate of 36.8% (+1.7pp), and continued to lead the industry in profitability. In terms of revenue structure, the real estate industry, construction, hospitality, cultural and creative industries accounted for 88.8%/1.3%/5.3%/1.0%/3.6% of revenue. The company's financial situation is sound, and it continues to maintain a low debt situation. After deducting the balance received in advance, the debt ratio is only 36.4%, far exceeding the 70% requirement of the three red lines. Financing costs remained low in the industry. The average financing cost in the first half of the year was only 4.35%-6.5%.
Firmly push forward the transformation of the medical and aesthetic industry, and the project is gradually being implemented. In the first half of the year, the company unswervingly promoted the transformation of the medical and aesthetic industry, consolidated standardized and refined operation and management, innovated diversified marketing models, continuously enhanced the operation and control capabilities of medical and aesthetic institutions, and steadily promoted internal and external mergers and acquisitions. On July 20, the company purchased 100% of the shares of the three medical and aesthetic hospitals of Wuxi Suya, Tangshan Suya and Shijiazhuang Suya held by the Zhenjiangsu Ning Global Medical and Aesthetic Industry Fund and Global Equity Investment with 337 million yuan in cash. The three hospitals had total revenue of 130 million yuan in 2020, net profit of 20.94 million yuan, net interest rate of 16%, 2021H1 had total revenue of 69.7 million yuan, net profit of 8.08 million yuan, and net interest rate of 12%. It is expected that in the future, as the company's medical and aesthetic industries continue to be implemented and projects are consolidated one after another, the company's performance will be effectively boosted.
The real estate business remains highly profitable and provides sufficient financial support for the transformation. The company's real estate business revenue in the first half of the year was 1.50 billion yuan (-10.8%), and the gross profit margin of the real estate business was 67.1% (+0.6pp). By the end of the reporting period, the company's total land storage area was 1.78 million square meters, of which the total land storage area located in Nanjing accounted for 63.6%. The company's land acquisition strategy in the first half of the year was relatively conservative. No new land storage projects were added during the reporting period. Benefiting from the active land acquisition strategy in the early years, the company's land storage cost advantage was clearly fully reserved. The company has always focused on the Nanjing market. In the past 5 years, Nanjing has accounted for more than 70% of the real estate sales settlement amount, creating mega markets such as Tianrun City and Venice Water City, all located in the core area of Jiangbei, Nanjing. In the future, the company will continue to launch projects such as Shuicheng on the North Bund and Tianhua Silicon Valley Phase III to maintain a strong level of profitability.
Profit forecast and investment advice: The compound growth rate of the company's net profit from 2021-2023 is expected to be 11.4%. Taking into account the company's abundant capital, stable profits in the real estate business, and rapid development of the medical and aesthetic business, maintaining “holding”
ratings.
Risk warning: Medical and aesthetic business development falls short of expectations, industry policy regulation risks, etc.
