Event: the company announced the half-year results of 2021, and the company achieved an operating income of 38.48 billion yuan in the first half of 2021, YOY+29.6%. The net profit of returning to the mother is 1.75 billion yuan, and the basic earnings per share of YOY-14.7%; is 0.46 yuan per share, YOY-16.1%.

Semi-annual revenue increased steadily: in the first half of the year, the company achieved operating income of 38.48 billion yuan, YOY+29.6%, growth rate increased by 2.28pct over the same period last year; home net profit of 1.75 billion yuan, YOY-14.7%, growth rate shrank 90.9pct compared with the same period last year. The settlement income of the real estate business in the first half of 2021 was 27.38 billion yuan, an increase of 31.5 percent over the same period last year, driving revenue growth. At the same time, as the profit and loss ratio of minority shareholders slightly increased to 13.83% in the first half of the year compared with the same period last year, superimposed by the rising prices of raw materials in the construction industry, the gross profit margin shrank by 0.97pct to 16.31% compared with the same period last year, weakening the growth of homed net profit to some extent. From a quarterly point of view, Q1 and Q2 achieved revenue of 14.349 billion yuan and 24.132 billion yuan respectively, corresponding to a year-on-year growth rate of + 23.86% and + 33.27% respectively, and a net profit of 685 million yuan and 1.063 billion yuan respectively, corresponding to a year-on-year growth rate of + 10.21% and-25.57%, respectively. Q1 revenue and net profit increased slightly, while Q2 revenue grew steadily but its net profit showed negative growth.

Net profit fell slightly: the company's gross margin was 16.31% in the first half of 2021, shrinking 0.97pct from a year earlier. The decline in gross profit margin is mainly due to: 1) due to the difference in settlement structure and the decrease in investment income from non-consolidated projects, the gross profit margin for real estate settlement decreased by 0.34 PCT to 19.06%. 2) due to the rise in the price of raw materials, the gross profit margin for construction business decreased by 2.82 PCT to 8.28%. We are also concerned that in the first half of 2021, the company achieved a net interest rate of 5.27%, a contraction of 2.71pct over the same period last year; and a net profit margin of 4.54% on equity, a year-on-year contraction of 2.36pct. Apart from the decline in the company's gross profit margin, it is mainly due to: 1) in order to cope with the impact of regulation, the company's financial and sales expense rate has increased; 2) the settlement of non-consolidated projects in the first half of the year has led to a decrease in investment income. In the first half of the year, the company's three rates reached 8.26%, shrinking 0.15pct compared with the same period last year, of which the management rate shrank by 0.32pct to 4.27% over the same period last year, while the financial and sales rates increased by 0.03pct and 0.14pct to 1.49% and 2.50% over the same period last year.

Steadily expand the land reserve: the company in the first half of the year to achieve a contracted sales area of 790.1 million square meters, YOY+29.7%; signed sales amount of 108.98 billion yuan, YOY+33.9%. From a regional point of view, the company's sales area accounts for 32% of the total sales area in first-and second-tier cities, and 36% in first-and second-tier cities. In the first half of the year, the company added 699.9 million square meters of planning, with a total price of about 28.7 billion yuan, corresponding to 26.33% of the land, the average land price of about 4100 yuan per square meter, and the average land price of new projects decreased by 7.1pct compared with 4400 yuan per square meter in the same period last year. In the first half of the year, the company has a land reserve of 4740 million square meters, of which 3193 million square meters are under construction and 1547 million square meters are undeveloped in YOY+7.5%;. According to the division of urban energy levels, nearly 33% of the soil storage is located in first-and second-tier cities, and 67% in third-and fourth-tier cities. In the first half of the year, the company has sold 128.82 billion yuan of outstanding resources, accounting for about 1.64X of the previous year's revenue, with high coverage for future performance.

The debt structure continues to be optimized: in the strict regulatory environment, the company's interest-bearing liabilities showed a downward trend. In the first half of 2021, the total size of the company's interest-bearing liabilities was about 76.756 billion yuan, down 1.77% from the same period last year. The ratio of interest-bearing liabilities to annual operating scale further maintains the lowest position in the industry. Among them, short-term loans and non-current liabilities due within one year account for 27.23% of all interest-bearing liabilities, down 2.02 percentage points from the end of 2020, and the long-term and short-term structure is more balanced. In terms of debt indicators, the interest-bearing debt ratio in the first half of the year was 20.58%, a contraction of 3.62pct over the same period last year; the asset-liability ratio excluding accounts received in advance was 79.07%, shrinking 3.91pct over the same period last year; and the net debt ratio was 95.27%, shrinking 51.90pct compared with the same period last year. The company has had a significant effect in reducing leverage in recent years. The proportion of maturing debt within one year was 15.65%, an increase of 1.93pct over the same period last year, and the cash-to-short debt ratio was 1.29, an improvement from 1.19 in the same period last year.

Investment suggestion: the company's revenue has increased steadily in the first half of the year, and the company has sold plenty of outstanding projects, providing room for future performance settlement. Based on this, we estimate that the company's 21-23 net profit forecast is 90.1,99.1 and 10.89 billion yuan respectively, corresponding to EPS 2.35,2.59 and 2.85 yuan, corresponding to PE 2.07,1.88 and 1.71, maintaining the "buy" rating.