Performance review
2021 performance is in line with market expectations
Overseas Chinese City An announced full-year results for 2021: operating income rose 25 per cent year-on-year to 102.6 billion yuan, while net profit fell 70 per cent to 3.8 billion yuan, in line with the growth range previously forecast. The company declares a dividend of 0.1 yuan per share (including tax) for the whole year, with a dividend rate of 21% (25% in 2020).
The sharp decline in the company's performance in 2021 is mainly due to a significant decline in the gross profit margin of ① settlement. In 2021, the gross profit margin of the company's comprehensive tourism business and real estate business decreased by 10/38ppt to 32% and 21% respectively, resulting in an overall after-tax gross profit margin of 12ppt to 20%. The investment income of ② decreased significantly, and the investment income generated by the company's disposal of long-term equity investment in 2021 decreased by 1.2 billion yuan to 800 million yuan compared with the previous year. The amount of impairment loss of ③ assets increased, and the company recorded an impairment loss of 2.1 billion yuan in 2021, an increase of 1.3 billion yuan over the previous year (including 800 million yuan for inventory decline).
The finance is sound and the financing advantage is outstanding. At the end of 2021, the company's cash on hand increased by 12% to 67.6 billion yuan compared with the beginning of the year, and the scale of interest-bearing liabilities decreased by 1.3 billion yuan to 140.2 billion yuan compared with the beginning of the year. At the end of the period, the company's cash-to-short debt ratio increased to 1.93 times (1.67 times at the end of 2020). Excluding advance payments, the asset-liability ratio and net debt ratio decreased respectively to 68.8% and 60.1% compared with the end of last year. In 2021, the company achieved a total of 58.6 billion yuan in external financing, with an average financing cost of 4.46%, which remains low in the industry.
Trend of development
Develop business to improve quality, increase efficiency and strengthen advantages. In 2021, the company continues to improve the project development rhythm and turnover efficiency through the construction of internal standardization system and cooperation with external high-quality counterparts, and the time from land acquisition to opening of some benchmarking projects has been shortened to about 3-6 months. Looking forward, we expect that the company will continue to improve its professional capabilities in the development sector and provide strong support for the development of culture and travel business by exchanging efficiency for benefits; at the same time, the company will consolidate the advantage of comprehensive development in the culture and travel sector. continue to obtain low-cost and high-quality resources on the land side (15 of the company's 23 new projects in 2021 are delisted at or close to the floor price).
Tourism business is positioned as the core growth pole of the company during the 14th five-year Plan period. In 2021, the company's cultural and travel business received 77.98 million visitors, returning to 150% in 2019 (96% after excluding new projects for that year), well above the industry average (54% nationwide). The company has positioned the tourism business as the core growth pole in the 14th five-year Plan, and is committed to becoming a first-class tourism enterprise with global competitiveness. We expect the company to accelerate the nationwide replication and upgrading of cultural and tourism products such as theme parks, natural and cultural scenic spots and cultural and tourism complex, and at the same time expand its product line with the acquisition of pan-tourism targets.
Profit forecast and valuation
Considering that repeated outbreaks may have a negative impact on the company's performance, we have lowered our 2022 profit forecast by 20% to 9.1 billion yuan, leaving the 2023 profit forecast unchanged. The current share price corresponds to a price-to-earnings ratio of 6.5 times 2023 / 5.1 times earnings. Maintain an outperform industry rating and a target price of 8.42 yuan (taking into account the adjustment of profit forecasts and the increase in the market's risk appetite for financially sound state-owned enterprises), corresponding to 7.6 to 6.0 times 2022 CPE 2023, which has 17% upside compared to the current stock price.
Risk.
The real estate market continued to decline; the epidemic repeatedly had a negative impact on the company's literature and travel business.