21H1 core performance + 12% year-on-year, in line with expectations, gross profit margin is still high. 21H1's operating income was 73.4 billion yuan, + 13.7% compared with the same period last year; net profit from home was 6.28 billion yuan, + 19.3% from the same period last year; core net profit was 6.2 billion yuan, + 11.5% from the same period last year, in line with expectations; and basic income per share was 1.78 yuan, + 16.7% from the same period last year. The real estate settlement income is 66.5 billion yuan, + 8.2% compared with the same period last year; the real estate settlement area is 4.05 million square meters, + 2.6% year-on-year. Gross profit margin, home net profit rate and core net profit rate are 28.6%, 8.6% and 8.4% respectively, compared with the same period last year-1.6pct, + 0.4pct and-0.2pct respectively; three fee rates are 3.8%, year-on-year-0.6pct, in which sales, management and financial rates are + 0.6pct,-0.2pct and-0.9pct respectively compared with the same period last year; accounts received in advance are 112.9 billion yuan, + 6.4% year-on-year, covering 0.9 times of the 20-year real estate settlement. In addition, an interim dividend of HK $0.7 is proposed, unchanged from a year earlier.

The annual sales of 21H1 are + 38% compared with the same period last year, and the ratio of land to sales is 13%. The sales amount of 21H1 company is 152.8 billion yuan, year-on-year + 38.3%, year-on-year sales target is 330 billion yuan, year-on-year + 10%; sales area is 8.61 million square meters, year-on-year + 36.7%; the average sales price is 177,000 yuan per square meter, + 1.2% year-on-year; and the sales payback rate is 75%. 21H1 Company is careful to take land, the amount of land is 20.1 billion yuan,-69% compared with the same period last year; the area of land is 3.01 million square meters, which is-76% compared with the same period last year; the average price of land is 6659 yuan / flat, which is + 27% compared with the same period last year; the ratio of land / sales amount is 13%, the ratio of land / sales area is 35%, and the average price ratio of land / sales is 38%. By the end of 21H1, the company had a layout of 110th city, with an uncompleted area of 7283 million square meters, which was-10.9% higher than that at the end of 20 years. The average land storage cost was 5554 yuan per square meter, accounting for 31% of the current sales price. 21H1 completed 7.16 million square meters, compared with + 54 percent of the same period last year. 21-year-on-year plan to complete 1400 million square meters, + 42 percent year-on-year.

The three red lines remain green, diversified business is advancing steadily, and revenue from hotels and shopping malls is growing rapidly. By the end of 21H1, the company's three red lines were in green. Of these, the net debt ratio was only 50.9%, which was controlled within 60% for 10 consecutive years; the cash-to-short debt ratio was 1.7 times; and the pre-debt ratio was 68.3%, compared with the same period last year-0.2pct. At the end of the reporting period, the company's financing cost was 5.6%, year-on-year-10bp. In terms of diversified business, 21H1 hotel revenue is 970 million yuan, year-on-year + 115%; mall revenue is 950 million yuan, year-on-year + 29%. The follow-up company plans to make steady progress in diversified business.

Investment advice: steady increase in performance, diversified promotion, and maintain the "over-holding" rating. Shimao Group started from Hercynian, expanded throughout the country, and moved forward steadily for three decades. After Xu Shitan took over as president at the beginning of 2019, he launched a series of changes, such as the aggressive "New Shimao" represented by the Strait region.

Promote each other with the steady development of "Lao Shimao" culture, promote the company to return to the high growth channel, soil storage quality is sufficient. In addition, the company plans to spin off other high-growth and high-value businesses and make steady progress in diversified businesses. We maintain the company's 21-23 earnings per share forecast of 4.09 yuan 4.65 yuan / 5.32 yuan, corresponding to 21PE3.2X, maintain the "overweight" rating.