Main points of investment
The company's performance is in line with market expectations: the company's 2021H1 operating income is 5 billion yuan (the same below), down 14% from the same period last year, mainly due to a decrease in recognized income from property sales; gross profit is 1.43 billion yuan, down 23% from the same period last year; gross profit margin is 28.6%, down 7.2% from the same period last year. The company is expected to carry forward more high gross profit projects and improve gross profit margin in the second half of the year. The net profit was 1.07 billion yuan, down 34% from the same period last year, and the net interest rate was 21.3%. The performance was in line with market expectations.
Self-owned commercial property has great potential for growth: 2021H1, the tax rental income of the company's self-owned investment property in China is 630 million yuan, an increase of 35% over the same period last year, of which shopping malls and office buildings, industrial parks and long-term rental apartments account for 50%, 34% and 16%, respectively. As of 2021H1, the opening area of the company's self-owned investment properties in China is 178.5 square meters, an increase of 47 percent over the same period last year. Among them, the company's operating commercial projects are 660,000 square meters, and about 2 million square meters of new commercial projects will be put into operation in the next four years, distributed in nine core cities such as Beijing, Shanghai and Nanjing, which is expected to bring steady cash inflows to the company.
Contract sales grew steadily: 2021H1, the company's contract sales volume was 41.8 billion yuan, an increase of 34% over the same period last year; the contract sales area was 1.9 million square meters, an increase of 41% over the same period last year. In the first half of the year, the company's average residential push rate was 600.65%, and the refund rate was more than 90%, speeding up turnover and cash return.
Low financing costs and adequate liquidity: as of 2021H1, the company's net debt ratio was 68%, up 16% from the end of 2020, mainly due to strong land investment in the first half of the year; the average financing cost was 4.8%, keeping the industry at a low level. As of 2021H1, the total loan of the company is 21.91 billion yuan, the short-term debt accounts for only 17%, the cash-to-debt ratio is 2.0, and the company is fully liquid.
Our point of view: the company has low financing cost and fast sales payback speed, and the debt structure is reasonable. The company's industrial park and self-owned commercial business maintain rapid growth and are expected to transform into commercial real estate and comprehensive national developers and operators. The current share price of the company corresponds to 2.8 times PE in 2020, which investors are advised to pay attention to.
Risk tips: macroeconomic growth slows; industry regulation and control policies tighten; liquidity tightens; company sales fall short of expectations; RMB depreciates.