Event description
On April 11, the company announced that it had an operating income of 42.61 billion yuan (+ 10.8%) in 2021, a net profit of 110 million yuan (a loss of 390 million last year), a net profit of 41.17 million yuan (a loss of 500 million yuan last year) and a comprehensive gross profit margin of 27.4% (- 4.0pct).
Event comment
Although turning losses into profits, the decline in gross profit margin, investment income and the proportion of taxes and fees, and the increase in asset impairment are a drag on performance. In 2021, the company's revenue was 42.61 billion yuan (+ 10.8%), of which residential development and investment properties accounted for 83.6% and 11.8%, respectively. Although the performance turned from loss to profit, the return net interest rate was only 0.25%. The weak profit was mainly due to the reduction of gross profit margin by 4.0pct to 27.4%, investment loss of 1.44 billion (loss of 1.22 billion in 2020), asset impairment of 1.98 billion (720 million in the same period last year), and increase of 1.2pct and 9.7pct to 10.3% and 73.7% respectively. The decline in profitability, the proportion of taxes and fees and the increase in impairment led to a 31.6% drop in the company's net profit from the same period last year to 770 million yuan, while the return to home net profit was mainly due to the fact that the profit and loss ratio of minority shareholders fell to 86% (134% in 2020).
In 2022, we will strive to reach 80 billion yuan in sales and expand no less than 7 light-asset commercial projects. The company's sales in 2021 were 72.7 billion (+ 4.8%), or related to the slowdown caused by the epidemic and the market downturn, failing to achieve the sales target of 100 billion yuan, sales area (- 8.0%), and average sales price (+ 13.9%). In 2021, 16 new plots of land were acquired, with a land acquisition amount of 31.6 billion (+ 51.1%), a land area of 3.27 million square meters (- 28.4%), a floor price of 9664 yuan per square meter (+ 111.1%), and an average premium rate of 16%. The Yangtze River Delta, Chengdu-Chongqing and Beijing-Tianjin-Hebei accounted for 39%, 23% and 9%, respectively. The intensity of land acquisition in terms of construction and amount is 114% (- 32.5pct) and 43% (+ 13.3pct). Although the intensity of land acquisition slows down in the second half of the year, investment is still positive throughout the year. By the end of 2021, the sales value of land storage is 223 billion yuan, and the selling period is about 3.1 years. The company strives to achieve sales of 80 billion yuan (+ 10.0%) in 2022. Abundant land storage may effectively ensure the growth of sales scale. In 2021, the company opened 4 new commercial projects, acquired 6 new commercial projects (1 heavy + 5 light), and opened 18 shopping malls (including light assets, 15 Dayue City + 3 spring breeze) by the end of 2021, with a commercial area of 272.8 million square meters. By the end of 2021, 20 shopping malls and other non-standard commercial projects will be reserved, with a commercial area of 178.8 million square meters, ensuring the scale of commercial opening in the later period.
Business operations continued to improve in 2021, with an average occupancy rate of 94.3% (+ 0.4pct) for opening projects and sales of 25.99 billion yuan (+ 40%) for 19 commercial projects (18 shopping malls + 1 Xiangyun town). The company has made great efforts to promote the landing of light asset expansion projects, including 7 light asset projects (5 cooperation agreements have been signed and 2 contracts to be signed) in 2021, 4 light asset projects have been opened by the end of 2021, and 6 light asset projects have been signed to be opened. 7 plans to continue to expand in 2022.
Financing costs downward, the three red lines to maintain the "yellow file" level. At the end of 2021, the company's interest-bearing debt was 71.8 billion yuan (+ 1.4%), and the average financing cost dropped to 4.91% (- 0.2pct), which is at a low level in the industry. The cash-to-debt ratio is 1.44, the net debt ratio is 90.1%, the asset-liability ratio after deducting accounts received in advance is 70.3%, and the three red lines maintain the "yellow file" level.
Investment advice: turn losses into profits in line with expectations, continue to pay attention to the release of value in the later stage. The company's performance of turning losses into profits is in line with expectations, and the impact of high prices on gross profit margin, investment income and asset impairment is gradually digested. With the steady growth of property holdings in the later period and the settlement of high-quality land under the dual-platform model, the company's performance is expected to continue to repair smoothly. It is predicted that the net profit from mother to mother in 2022-2024 will be 7.9 trillion yuan, and the performance growth rate in 2022-2024 will be 372%, 55% and 28%, corresponding to the "over-holding" rating of 37Compact E for 37Compact 24max 19X.
Risk hint
1. The pace of industry policy easing is not as fast as expected.
2. The progress of digestion at a high price in the early stage is not as expected.