The company achieved revenue of 958.2 billion yuan (+23.9%) in 2021H1, net profit of 11.99 billion yuan (+9.4%), and core net profit of 13.15 billion yuan (+0.8%).
Incident comments
Delivery area increased year-on-year, and subsequent performance is still supported. The beneficiary delivery area increased year-on-year (+60.7%), and the company's revenue increased 23.9% year-on-year. In line with industry trends, the company's comprehensive gross margin fell by 2.2 pct to 20.8% in the first half of the year (down 2.9 pct to 26.4% after excluding the impact of business merger adjustments); in addition, the company's other revenue and earnings declined markedly (same decline of 3.26 billion dollars, mainly due to a high base due to the disposal of Jinke Co., Ltd.'s equity disposal in the same period last year), and other expenses and losses (same increase of 1.26 billion dollars, or related to changes in the fair value of Shell's shares) also hampered the company's performance; although financial costs and income tax expenses fell sharply, there was a certain impact on the company's performance growth. The speed is still weaker than camp Receive performance. Looking ahead to the whole year, the company's high sales in recent years provided support for subsequent delivery and settlement. As of mid-year, the company's advance payment scale reached 319.73 billion yuan, pre-receiving/annualized settlement was close to 1.4X, and the margin for another decline in gross margin was relatively manageable. It is expected that subsequent core profits will still be supported.
Sales performance is impressive, and land acquisition will shift from being relatively aggressive to being relatively cautious. The low base under the influence of the epidemic last year, combined with strong demand and supply in the first half of this year, the company's sales performance was impressive. 2021H1 achieved sales of 32.076 billion yuan (+64.3%, equity ratio 62.6%), sales area of 21.945 million square meters (+56.4%), and an average sales price of 14,600 yuan/square meter (+5.0%). Among them, sales in 9 markets including Wuhan and Hangzhou exceeded 10 billion dollars. The company's saleable resources exceeded 660 billion yuan in the second half of the year, and the annual sales growth rate is expected to be higher among leading real estate companies. The company's land acquisition performance in the first half of the year was relatively positive, adding an equity value of 213.5 billion yuan, a rolling 12-month equity investment ratio of 28.5%, and the equity investment ratio for the first half of the year being 37.9%. Looking ahead, land acquisition in the second half of the year may be relatively cautious. The equity investment ratio may be kept within 20%, and the annual equity investment ratio will be kept within 30%. As of mid-year, the company had earthen storage of 278 million square meters and equity land storage of 164 million square meters (value of goods of about 2 trillion yuan). High-quality, high-volume land storage provided support for steady growth in sales.
The debt structure continues to be optimized, and “Real Estate +” has achieved another good performance. As of mid-2021, the company's interest-bearing debt was 303.53 billion yuan (basically the same as at the end of the previous year), and the net debt ratio, balance ratio excluding advance collection, and unrestricted short-term cash debt ratios were 86.6%, 76.0%, and 1.11 (respectively, compared with changes at the end of the previous year -9.4pct, -2.3pct, +0.03), maintaining a “yellow file” position; domestic and foreign credit ratings have also steadily improved. Furthermore, the company's “real estate +” business developed with outstanding results in the first half of the year. Property management, cultural tourism, etc. all had good results, and profitability and influence continued to increase.
Investments will be more prudent, and the quality of operations will be more important than scale growth. After the company's investment becomes more prudent, the debt structure optimization process is expected to accelerate. Sufficient land reserves can guarantee steady growth in subsequent performance, and valuation repairs can be expected. Net profit attributable to the mother in 2021-2023 is expected to be 265/290/31.5 billion, and PE is 2.9/2.7/2.4X, maintaining the “buy” rating.
Risk warning
1. Decline in industry removal rate and tightening of financing environment;
2. Fluctuations in shell stock prices brought about fluctuations in investment income;
3. There is uncertainty about when gross settlement margin will bottom out.