The results in the first quarter of 2021 and 2022 were lower than we expected.
Jinke shares had an operating income of 112.3 billion yuan in 2021, an increase of 28% over the same period last year, and a net profit of 3.6 billion yuan, down 49% from a year earlier to no dividend in 2021. 1Q22's operating income was 12.7 billion yuan, an increase of 2% over the same period last year, and its net profit was-290 million yuan, turning from profit to loss. Both 2021 and 1Q22 results were lower than we expected, mainly due to the higher-than-expected decline in clearing gross margin.
The sharp decline in the company's performance is mainly due to a significant decline in the gross profit margin of ① settlement. In 2021, the gross profit margin before tax dropped 5.9ppt to 17.2% compared with the same period last year. 1Q22 dropped 9.3ppt to 10.7% compared with the same period last year; ② 's investment income decreased, affected by the decrease in income from joint venture real estate projects, by 22% in 2021 compared with the same period last year. ③ provides for large inventory impairment, the company's asset impairment loss increased more than 4 times to 2.2 billion yuan in 2021; ④ minority shareholders' profit and loss share increased, and the settlement of low equity projects increased, resulting in a 15% year-on-year increase in minority shareholders' profit and loss in 2021, accounting for 46% of net profit from 28%.
Cash on hand has shrunk, and the cash-to-debt ratio has fallen below 100%. At the end of 2021, the company's interest-bearing liabilities decreased by 17% to 80.6 billion yuan compared with the beginning of the year, but due to the tightening supervision of pre-sale funds and cash outflow from fund-raising activities, the cash on hand at the end of the year decreased by 34% compared with the beginning of the year, and the cash-to-debt ratio decreased to 0.9 times (1.3 times at the beginning of the year and 0.8 times at the end of 1Q22). At the end of 2021, the net debt ratio and deduction asset-liability ratio were 70% and 69.2% respectively. At the end of 1Q22, they were 69% and 67.9% respectively, with a slight improvement from the previous month. The three red line indicators were "green".
Fall into the "yellow file". We remind investors to pay attention to the follow-up financial security of the company.
Trend of development
The sales end continues to have excellent inventory and strong payback. In 2021, the company continued to promote inventory removal, structural adjustment, distribution reduction, and recovery of money. the annual sales amount decreased by 18% to 184 billion yuan compared with the same period last year, with a rebate of 185.3 billion yuan, corresponding to a payback rate of 101%. From January to April in 2022, the company achieved sales of 28.1 billion yuan, down 57% from the same period last year. We expect that the company will continue to strengthen the elimination of stock value throughout the year, do the main business of fine real estate, and continue to promote the business strategy of "one stability, two declines and three improvements".
We will continue to be prudent and continue to optimize financial indicators. The company added 37.6 billion yuan in total land storage cost in 2021, down 58% from the same period last year, and the corresponding land intensity was only 20% (40% in 2020). No land has been acquired since the beginning of 2022. The company sold 6591 million square meters of land at the end of 2021, down 7 percent from the beginning of the year, but can still support sales for about three years. We believe that the company will continue to improve its financial indicators in the future, and its attitude towards land is expected to continue to be prudent.
Profit forecast and valuation
The company's contract liabilities at the end of 2021 decreased by 7% to 124.6 billion yuan compared with the beginning of the year. Taking into account the possible pressure on the company's settlement income and profit margins, we lowered our 2022% earnings forecast for 2023 by 47% to 363.8 billion yuan. The current share price corresponds to a 23-year price-to-earnings ratio of 6.6 pound to 6.3 times 2022 pound. Maintain the outperform industry rating, lower the target price by 11% to 4.72 yuan (mainly considering the market's risk appetite for the real estate sector upside), corresponding to 7.0x7 times 2022amp 23-year price-to-earnings ratio, which has 6% upside compared to the current stock price.
Risk
The recovery progress of the industry boom was weaker than expected; the financing environment tightened more than expected.