21H1 net profit of the mother was +9% year on year, and the net profit of the core mother was +1% year on year, in line with expectations. At 21H1, the company achieved revenue of 95.82 billion yuan, +23.9% year on year; gross profit of 19.08 billion yuan, +12.5% year on year; net profit of 11.99 billion yuan, +9.4% year on year; after excluding business consolidated income and the corresponding effects of fair value adjustments of financial assets and investment properties, exchange gains and losses, exchange gains and losses of financial assets and charitable donations, the core net profit was 13.15 billion yuan, +0.8% year-on-year, in line with market expectations; basic earnings per share were 2.62 yuan, +8.7% year on year; gross margin and net profit margin were calculated at 20.62 yuan, +8.7% year on year; gross margin and net profit margin were calculated at 20.62 yuan, +8.7% year on year 8% and 12.5%, compared to -2.2 pct and -1.7 pct, respectively, compared to the previous year. By the end of 21H1, the company's advance payments reached 319.73 billion yuan, which could cover 1.4 times its revenue in 2020. It is expected to help its performance increase steadily in the future.
21H1 sold 320.8 billion dollars, +64% year on year, and equity acquisition sales were 38%, which was relatively positive. 21H1, the company's sales amount was 320.8 billion yuan, +64.3% year on year; equity sales amount was 2008 billion yuan, +51.4% year on year; sales area was 219.5 million square meters, +56.4% year on year; average sales price was 146.2 million yuan/square meter, +5.1% year on year. In 21H1, the company's equity acquisition area was 17.08 million square meters, adding 213.5 billion yuan in land storage equity value. Open market land acquisition, mergers and acquisitions, industrial cooperation, etc. accounted for 62%, 24%, and 14% respectively. Equity land acquisition value/equity sales amount reached 1.06 times; among them, 20H2-21H1 equity land acquisition sales ratio reached 28.5%, and 21H1 equity land acquisition sales ratio was 37.9%. By the end of 21H1, the company's authorized land storage reached 164 million square meters, and the corresponding equity land storage value reached 2.0 trillion yuan. Among them, the Yangtze River Delta, the Bohai Rim, the western core, the central core, and South China accounted for 25%, 25%, 27%, 12%, and 11% respectively. At 21H2, the company expects a total saleable value of 667.5 billion yuan, including 205.8 billion yuan in inventory at the end of the first half of the year and 461.7 billion yuan in additional saleable resources in the second half of the year. Considering that the company's layout focuses on Tier 1, 2 and strong third-tier cities, there is plenty of sellable value to help subsequent sales increase steadily.
The net debt ratio fell to 87%, the short-term cash debt ratio reached 1.11, and credit ratings continued to improve. At the end of 21H1, the company's net debt ratio was 86.6%, down 9.4 pct from the end of 2020; the unrestricted short-term cash debt ratio reached 1.11, up 0.03 times from the end of 2020; the net debt ratio after excluding advance payments reached 76.0%, down 2.3 pct from the end of 2020. Among them, the net debt ratio and short-term cash debt ratio all met the “three red lines” standards
The standard maintains the “three red lines” and the yellow level. The company's credit rating has been steadily improving, with S&P improving to BB stable, Moody's improving to Ba3 positive, and Fitch improving to BB positive, which is expected to drive future financing cost optimization. The company's real estate+business developed rapidly. At 21H1, Sunac Services achieved revenue of 3.32 billion yuan, +85.4% year on year; Guimu's net profit was 610,000 yuan, +154.4% year on year, and Sunac China is expected to achieve high-quality collaborative development; Sunac Culture and Tourism has rapidly formed a core urban layout, with 21H1 achieving revenue of 2.61 billion yuan, +166% year on year; management profit of 4.4 million yuan, 20H1 was -220 million yuan; passenger flow was 71,201 million, +103% year on year. Furthermore, the company promotes the construction of digital technology, and is expected to support accurate management and investment recommendations in all aspects of real estate, property, and cultural tourism: stable performance, beautiful sales, diversified development, and maintenance of the “buy” rating. With a countercyclical expansion strategy, Sunac China successfully bucked the trend and leveraged expansion in 15-17, and used the label advantage of mergers and acquisitions to create strong advantages of strong, high-quality land storage and low land costs, which is conducive to achieving rapid turnover and high gross profit margins. At the same time, with the concentrated release of performance, the net debt ratio is expected to drop significantly, driving down financing costs. Considering the impact of downward pressure on the company's profit margin and changes in investment income, etc., the company's earnings per share forecast for 2021-23 was lowered to 6.23, 6.44, and 7.54 yuan (the original forecast values were 8.02, 8.44, and 9.30 yuan). The current price corresponding to 21/22 PE was 2.7/2.6 times, respectively; given that the company has not sold enough and the land storage is rich and high quality, the target price is maintained at HK$47.5 to maintain the “buy” rating.
Risk warning: Real estate regulation has been tightened beyond expectations, and the sales removal rate has fallen short of expectations.