Main points of investment:
Maintain the overweight rating and maintain the target price to 6.20 yuan. In the first half of the year, the settlement accelerated to a certain extent, the gross profit margin of the development business still declined, and the commercial real estate recovered obviously, which was basically in line with our expectations. In 2021-2023, the EPS was maintained to 0.31 PE, with a growth rate of-/ 16% and 19%. The target price was maintained to 6.20 yuan, and the current price corresponds to 11.1 times of 2021.
China reported a net profit of 610 million, an increase of 9% over the same period last year, in line with market expectations. 1) the revenue in the first half of the year increased by 17% compared with the same period last year, and the gross profit margin of the development business fell by 5.6 pcts to 22.1% compared with 2020. Against the backdrop of the hot property market in the core cities, the impairment loss improved significantly; 2) the business revenue was significantly repaired, but it was still slightly lower than that in the same period in 2019. The company is still in the process of repairing its income statement, and profit margins are expected to bottom out in 2021.
Sales pressure is greater in the second half of the year, and the speed of commercial application is not as fast as expected. 1) the sales volume in the first seven months is 49 billion, which is 49% of the annual sales target, which is lower than that of the head company, and sales still need to be accelerated in the second half of the year. 2) in the first half of the year, 2.2million square meters of land is acquired, which is about 1.24 times the sales area, and the expansion intensity is not low. However, the complex only took 550,000 square meters of land in Nanjing and acquired 345,000 square meters of Chengdu TOD project, and the equity ratio is not high. We believe that the company still needs to further improve at the turnover level and increase the coordination between business and housing.
The personnel layout will be completed, and the commercial efforts will be realized in the second half of the year. 1) the management adjustment of the company was completed in the first half of the year, and we expect that this will further enhance the coordination between Dayue City Real Estate and Dayue City Holdings; 2) the new product line of commercial real estate has been successfully opened in the spring breeze of Dayue City, and five shopping malls will be opened in the second half of the year. Growth is on the fast track, and the acceleration of business accumulation is expected to boost market capitalization.
Risk hint: commercial and residential business coordination is not as expected.