The net profit of home ownership in the first three quarters of 2021 was + 2.0% compared with the same period last year, continuing steady growth. On October 29, the company released its third quarter 2021 report. In the first three quarters, revenue reached 63.68 billion, + 33.4% compared with the same period last year, and the net profit returned to the home was 4.53 billion, + 2.0% compared with the same period last year. Due to the higher-than-expected gross profit margin and market boom, we expect the company's EPS to be 1.41,1.54,1.70 yuan in 2021-2023 (the previous value is 1.52,1.82,2.15 yuan). With reference to the comparable company's 3.1x PE valuation in 2021 (Wind consensus expectation), considering the company's steady growth expectation and diversification strategy in the next five years, give the company a valuation of 3.8x PE in 2021. The target price is 5.36 yuan (the previous value is 6.08 yuan), maintaining the "buy" rating.
Settlement volume, gross profit margin and equity ratio down
In the first three quarters, the company's real estate settlement continued to expand, with a settlement area of 7.18 million square meters, which promoted the high growth of revenue. The reason that the growth rate of net profit was lower than that of revenue was as follows: 1. The gross profit margin was year-on-year-5.7pct to 19.5%; items with low equity ratio were centrally settled, and the profit and loss of minority shareholders were + 36% to 1.55 billion, accounting for + 5pct to 25.5% of the net profit compared with the same period last year. Contract liabilities at the end of the period were + 8 per cent to 145.4 billion at the end of 2020, or 1.7 times revenue for the whole of 2020.
Affected by the decline in the market economy in the third quarter, the pace of land acquisition slowed down in the first three years. In the first three years, the company achieved sales of about 146.3 billion, a slight drop of 0.8% compared with the same period last year; sales rebate of about 143.5 billion; and sales area of about 1462 million square meters, + 2.8% of the same period last year. In the third quarter, under the influence of the decline in market heat, the pace of land acquisition slowed down at the same time. In the first three quarters, the land storage capacity increased by 9.9 million square meters,-50.4% compared with the same period last year, and the total land price was 38.7 billion,-47.7% compared with the same period last year. Investment intensity compared with the first half of the year-8pct to 26.5%.
The rights and interests have declined, and the amount of land held by the amount accounts for the whole year of 20 years-5pct to 52%. Among them, 59% of the land is acquired through commerce, industry, mergers and acquisitions, and so on.
The debt has improved steadily and continues to meet the green requirements.
The balance of interest-bearing liabilities at the end of the reporting period decreased by 10.1 billion to 87.59 billion compared with the beginning of the year (23%, 59% and 18% within 1 year, 1-3 years and more than 3 years). All the three red line indicators are qualified and continue to meet the green requirements. In the first half of the year, it raised about 10 billion yuan through direct financing instruments such as corporate bonds, short-term financing, winning votes, CMBS, and US dollar bonds, and successfully issued 1 billion yuan in ultra-short financing in the third quarter, with an interest rate of 6.8 percent.
Buybacks show determination to grow and maintain a "buy" rating
On July 12, 2021, the board of directors passed a buyback bill, which plans to repurchase 5-1 billion yuan in the next 12 months, with a total repurchase amount of 170 million completed by October 29. Due to the higher-than-expected gross profit margin and market boom, we expect the company's EPS to be 1.41,1.54,1.70 yuan in 2021-2023 (the previous value is 1.52,1.82,2.15 yuan). With reference to the comparable company's 3.1x PE valuation in 2021 (Wind consensus expectation), considering the company's steady growth expectation and diversification strategy in the next five years, give the company a valuation of 3.8x PE in 2021. The target price is 5.36 yuan (the previous value is 6.08 yuan), maintaining the "buy" rating.
Risk tips: the decline in the prosperity of the industry; the impact of the southwest market; diversified business poses pressure on the capital chain.