In the first three quarters of 2021, the company achieved revenue of 63.7 billion (+ 33.4%), net profit of 4.5 billion (+ 2.0%), and non-return net profit of 3.5 billion (- 14.8%).

Event comment

The downward gross margin is a drag on short-term performance and still has the ability to maintain relative stability in the future. In the first three quarters of 2021, the company achieved revenue of 63.7 billion (+ 33.4%), net profit of 4.5 billion (+ 2.0%), and non-return net profit of 3.5 billion (- 14.8%). The high growth rate of revenue is mainly due to the good performance of project completion and delivery (2021H completion year-on-year + 41.1%, year-on-year completion target + 30.3%); settlement gross profit margin is down with the industry trend (2021Q1-3 composite gross profit margin is also reduced to 19.5%), superimposed by the decline in investment income of joint venture enterprises and the increase in the profit and loss ratio of minority shareholders, the company deducts non-return net profit to a certain extent compared with the same period last year. However, the contribution of revaluation income, such as housing investment and acquisition, has increased to a certain extent, which will eventually lead to a slight increase in net profit compared with the same period last year. As of the end of Q3, the company's total pre-revenue is 145.5 billion, with pre-revenue / annualized revenue = 1.4X; taking into account the completion target of higher growth rate, the average sales price has increased year by year in previous years, and the room for gross profit margin to decline again is limited. It is expected that the company's follow-up performance will still be able to maintain a relatively stable performance.

Sales in the first three quarters were steady, with more prudent land acquisition but more diversification. The company's overall sales in the first three quarters of 2021 were stable, with a realized amount of 146.3 billion yuan (- 0.7%), an area of 1462 million square meters (+ 2.9%), and an average price of 1.0 million yuan per square meter (- 3.5%). Under the background of tight capital in the industry, the company attaches importance to the safety of cash flow, and the performance of land acquisition tends to be prudent. 2021Q1-Q3 added 9.9 million square meters (- 50.4%), the total land price is 38.7 billion yuan (- 47.8%), and the average floor price is 0.4 million yuan per square meter (+ 5.3%). Land area / sales area = 67.7% (- 72.7pct), land amount / sales amount = 26.4% (- 23.8pct), floor price / average sales price = 39.0% (+ 3.2pct). Diversified access to land has achieved remarkable results, with a capacity of 5.83 million square meters in the first three quarters, accounting for 59% of the total.

Reduce the debt and get the money back, and the financial structure has been optimized. The company adheres to the strategy of "one stable, two declines and three promotions" and takes the initiative to reduce its debt and adjust its structure. As of the end of 21Q3, the interest-bearing liability was 87.6 billion yuan, which was nearly 10 billion yuan lower than at the beginning of the year; we continued to pay back 143.5 billion yuan in sales in the first three quarters, with a disclosed repayment rate of 98.1%; and the net debt ratio / asset-liability ratio excluding pre-received assets and liabilities / cash short-debt ratio were 73.2%, 68.5%, 1.5, respectively, maintaining the "green" status.

The follow-up performance outlook is still stable, and the financial structure continues to be optimized. The company's completion target this year is more aggressive, the downward space of the settlement gross profit margin is relatively limited, and the annual performance is still expected to achieve a smooth transition; take the initiative to reduce the debt to recover the money, continue to optimize the financial structure, and maintain the "green file" status; active buyback shows long-term development confidence. It is estimated that the company's 2021-2023 net profit will be 100 million in 74-81-90, with an increase of 5.9%, 9.2% and 11.0%, respectively, corresponding to a PE of 3.3, 3.0 and 2.7x, respectively, maintaining a "buy" rating.

Risk hint

1. There is uncertainty about the elimination of non-core cities.

two。 There is uncertainty about the time when the gross profit margin hits bottom.

3. There is an inaccuracy between the ownership structure and the relationship between the actors in unison.

Qualitative.