The results of the three quarterly reports in 2021 are in line with our expectations.
Jinke shares announced 1-3Q21 results: operating income of 63.7 billion yuan, an increase of 33% over the same period last year, and net profit of 4.5 billion yuan, an increase of 2% over the same period last year, in line with our expectations.
The settlement scale is growing actively, and the settlement profit margin and equity ratio are still on the low side. The company's active completion and delivery in the first three quarters led to an increase of more than 30% in real estate settlement income, of which 3Q21 revenue increased by 13% compared with the same period last year. After-tax gross profit margin fell 3.5ppt to 17.8% year-on-year in the first three quarters, narrowing the growth rate of after-tax gross profit to 11% year-on-year, of which 3Q21 gross profit margin fell 2.2ppt to 17.1%. At the same time, the proportion of project equity settled in the first three quarters was lower than that in the same period last year, and the profit and loss of minority shareholders increased by 36% year-on-year, accounting for 25% of net profit (20% in the same period last year), resulting in profit growth narrowing to the low single digits.
Financial indicators are stable and excellent, and financing channels are smooth. Since the beginning of the year, the company's interest-bearing liabilities have fallen by 8% to 92.6 billion yuan (including perpetual debt), the net debt ratio at the end of the period is 74.2%, and the withholding asset-liability ratio is 68.5%, all of which are slightly lower than at the beginning of the year. Cash short-term debt increased by 0.1 times to 1.4 times compared with the beginning of the year (excluding pre-sale regulatory funds), keeping the "green file". Thanks to the improvement of financial indicators and the upgrading of credit rating, the company still maintained a smooth financing channel in the tight financing environment in the third quarter, completing the issue of 1 billion yuan of ultra-short financing.
Development trend
Sales in the first three quarters were flat compared with the same period last year, and the payback rate remained high. The company achieved sales of 146.3 billion yuan in the first three quarters, basically the same as the same period last year, the sales area increased 3 percent year-on-year to 1462 million square meters, and the corresponding average sales price decreased 3 percent to 10007 yuan per square meter. The company achieved sales rebate of 143.5 billion yuan in the first three quarters, with a corresponding payback rate of 98%, which is higher than that of 1H21 (97%) and 2020 (90%).
It is expected that the attitude of land acquisition will continue to be prudent. In the first three quarters, the company added 9.9 million square meters of land storage area, down 50% from the same period last year, the new land storage amount was 38.7 billion yuan, down 48% from the same period last year, and the corresponding land intensity was only 26%. Among them, the amount of land obtained by 3Q21 was 3.3 billion yuan, down 83% from the same period last year. For the maintenance of financial security and the requirements of quality and profit, and considering that the company's current unsold land reserves can support sales for more than 2 years, we judge that the company will continue to be prudent in taking land in the future.
The profit for the whole year is expected to be basically the same as last year. We expect the completion of delivery in the fourth quarter to continue positive growth, leading to an increase of more than 30% in settlement income; there is still downward pressure on the ratio of settlement gross profit margin to equity. It is expected that the gross profit margin will drop by 2-3ppt compared with last year, and the profit and loss ratio of minority shareholders will increase to about 30%, driving the full-year profit growth rate to be basically the same as last year.
Profit forecast and valuation
Taking into account the pressure on the company's settlement profit margin and equity ratio, we cut our profit forecast by 6% by 10% to 7.7 billion yuan in 2022. The current share price corresponds to a price-to-earnings ratio of 3.1 times the price-to-earnings ratio of 3.4 pounds in 2022. Maintain the outperforming industry rating, and lower the target price by 15% to 5.33 yuan (mainly due to the pressure of performance growth and the downward market risk appetite caused by the credit events of individual real estate enterprises), the new target price corresponds to the price-to-earnings ratio of 3.7 times 2021 amp. 2022 and the upside space of 20%.
Risk
In the main layout, the regulation and control policies of cities have tightened more than expected, and financing policies have tightened more than expected.