Core ideas:

First, contract sales increased by 49.5% over the same period last year, and the focus of investment returned to the base camp in the first half of 2021. The contract sales of the first opening shares reached 66.26 billion yuan, an increase of 49.5% over the first half of 2020. The overall intensity of investment is on the conservative side. Due to the concentration of land supply in Beijing, the focus of increasing reserves has returned to Beijing. The proportion of new soil reserves in Beijing is 69%, compared with less than 50% in the same period in 2020 and 28.3% in 2020.

Second, increasing income does not increase profits, and profit margins have declined significantly.

In the first half of 2021, the operating income was 33.32 billion yuan, an increase of 84.8 percent over the same period last year, the gross profit was 5.65 billion yuan, an increase of 20.2 percent over the same period last year, and the net profit was 1.68 billion yuan, down 13.5 percent over the same period last year. The gross profit margin and net profit margin were 17.0% and 5.1% respectively, down 9.1% and 5.7% respectively over the same period in 2020.

Third, the "three red lines" change from red to orange, the financing cost may slightly reduce the net debt ratio, the asset-liability ratio excluding advance collection, and the cash short-debt ratio are 162.1%, 74.6% and 1.2 times, respectively, which are 16.5 percentage points, 0.3 percentage points and 0.34 times higher than those at the end of 2020. Thanks to the obvious improvement in the cash short-debt ratio, the "three red lines" gear has changed from red to orange. However, the high net debt ratio means that there is still a long way to go for companies to reduce their debt. In the first half of the year, the interest rates of many of its newly issued direct financing vehicles were the same or lower than in previous years, so it is speculated that their average financing costs are also the same or slightly lower than at the end of 2020.