Event: the company released its 2021 semi-annual report, with an operating income of 38.482 billion yuan during the reporting period, an increase of 29.6% over the same period last year, and a net profit of 1.748 billion yuan, down 14.7% from the same period last year.

The gross profit margin fell steadily, and the decrease in the carry-over of non-consolidated items affected the decline in profits in the current period. The decline in the company's homing net profit during the period is mainly due to the higher investment income base in the same period last year and the decrease in the settlement of non-consolidated projects in the current period, resulting in a decrease in investment income. Revenue growth was mainly driven by the increase in the scale of real estate settlement, with the real estate settlement amount of 27.38 billion yuan during the period, + 31.4% over the same period last year. In terms of profit margin, the company achieved a gross profit margin of 16.31%, a year-on-year 1.0pct, a decline of 1.0pct compared with the whole year of 2020, and a net profit rate of 4.5%, a year-on-year-2.4pct, a decline of 4.5pct compared with the whole year of 2020. the contract debt at the end of the period was 128.84 billion yuan, covering 1.63 times of the revenue in 2020. the outstanding resources were 120.29 billion yuan, covering 2.05 times the revenue in 2020, fully ensuring future growth.

In terms of expense rate, the three fees / revenue during the period is 8.2%, year-on-year-0.2pct; sales fee / revenue is 6.7%, year-on-year-0.2pct; sales fee / sales amount is 2.4%, year-on-year-0.1pct; financial expenses / revenue is 1.5%, year-on-year + 0.03pct.

The steady increase in sales is prudent in the acquisition of land, and the cost of land is properly controlled. During the period, the company realized sales of 108.98 billion yuan, + 32.9% compared with the same period last year, of which first-and second-tier cities accounted for 36%, and the Yangtze River Delta accounted for 62%. The company's sales target in 2021 was 250 billion yuan, and the completion rate of the current period was 44%; the sales area was 790.1 million square meters, + 29.7% compared with the same period last year; the average sales price was 13793 yuan / flat, + 3.2% compared with the same period last year. In terms of land acquisition, the company took 699.9 million square meters of land during the period, + 1.7% compared with the same period last year, including 22% of first-and second-tier cities, 43.8% of the Yangtze River Delta, 29.1 billion yuan of land,-4.2% of the same period last year, 4158 yuan / flat,-5.8% of the same period last year, 26.7% of the land / sales amount, year-on-year-7.3pct, and the average floor price / sales price is 30.1%, year-on-year-7.6pct. In terms of start and completion, the company achieved 5.41 million square meters of new construction during the period,-5.9 percent of the same period last year, 58 percent of the annual plan, 3.95 million square meters of construction completed,-25.0 percent of the same period last year, and 32 percent of the annual plan. By the end of the period, the company had built 3193 million square meters of construction projects and 1547 million square meters of unstarted projects, totaling 4740 million square meters, of which the area of first-and second-tier cities accounted for about 33 percent, and that of third-and fourth-tier cities accounted for about 67 percent. In the construction business, the revenue during the period was 11.35 billion yuan, + 17.2% compared with the same period last year, and the new contract value was 15.31 billion yuan, an increase of 3.3% over the same period last year. Among them, 17 projects worth more than 300 million yuan, accounting for 53% of the new contract value. In addition, the company will accelerate the exploration of the second growth curve, integrate the respective business advantages of Central South Land and Construction, accelerate exploration and expansion in agent construction and EPC, and export more management capacity in real estate development and urban infrastructure.

The three red lines maintain the yellow file, and the operating cash flow is steady. During the period, the company's operating cash inflow was 74.64 billion yuan, which was 3.6 times of the various interest-bearing liabilities due within one year, and the net cash flow generated by operating activities was 2.41 billion yuan, which remained positive. In terms of the three red lines, the asset-liability ratio (excluding advance receipts) is 77.42%, which is-4.26pct compared with the same period last year; the net debt ratio is 95.3%; the cash-to-debt ratio is 1.29, which is temporarily in the yellow file, and the third-tier standard is expected to be achieved by 2022. At the end of the period, the company recorded interest-bearing liabilities of 76.76 billion yuan, a decrease of 3.15 billion yuan compared with the end of 2020, of which the short-term debt accounted for 27.2%, compared with the same period last year-3.1pct, and the long-term debt accounted for 72.8%. The long-term and short-term structure was more balanced.

Investment advice: maintain the company's buy rating. It is estimated that the company's EPS in 2021-23 will be 2.41 Universe 2.70 PE 3.22 yuan, corresponding to 1.90 Universe 1.69 Universe 1.42 times.

Wind insurance hint: the decline of industry sales boom is higher than expected, and the tightening of policy regulation is higher than expected.