Revenue declined in the third quarter alone, and the net profit returned to the mother increased significantly: 2021Q3's revenue was 550 million yuan, down 26.6%, and the net profit returned to the mother was 12 million yuan, an increase of 112.7%. The net cash flow of the company's operating activities in the third quarter was-1.29 billion yuan, with a decrease of 147.7%.

Both gross profit and net profit increased year-on-year, and the expense rate increased slightly over the same period last year: 2021Q3's gross profit margin was 14.6%, which was basically the same as the increase in 2.8pct, while the net profit rate was 2.1%, which turned negative to positive compared with the third quarter of 2020 and decreased by 7.5pct compared with the second quarter of 2020. The total expense rate of the company in the third quarter was 19.9%, with an increase of 6.1pct and an increase of 0.5pct compared with the second quarter.

In the third quarter, the company's newly signed orders declined compared with the same period last year, and the existing orders decreased somewhat: 2021Q3's newly signed orders totaled 300 million yuan, a decrease of 41.2 percent. Among them, the amount of newly signed orders for public clothes, housing and design is 2.140.70 / 16 million yuan respectively. In the face of stricter regulation and control of real estate and the declining prosperity of the industry, the company has adopted a more prudent business strategy, resulting in a decline in the number of new orders signed by the company. The company intends to sell the shares of its subsidiaries: the company is planning to sell the stake of Hong Tao Wen Lu, a secondary holding subsidiary (assets of Four Points by Sheraton Curitiba in Liupanshui). The planned sale of assets will help to invigorate the company's existing assets, increase cash flow, and optimize the asset structure.

Valuation

The company's performance is in line with expectations, and we believe that the company is expected to turn around in 2021 and adjust its performance slightly. It is estimated that from 2021 to 2023, the management income of the company will be 33.4,37.0 and 4.27 billion yuan respectively, the net profit of returning to the mother will be 0.7,0.8 and 100 million yuan respectively, and the EPS will be 0.05,0.06,0.08 yuan respectively.