Event
The company released sales data, the sales amount in June was 13.5 billion yuan, the sales area was 800000 square meters, the average sales price was 17200 yuan per square meter; from January to June, the sales amount was 63.1 billion yuan, the sales area was 4.14 million square meters, and the average sales price was 16200 yuan per square meter.
Brief comment
The sales margin improved in June. Sales of companies affected by the epidemic fell sharply in the first half of the year, with sales falling 54% from January to June compared with the same period last year. The epidemic eased in June, and the company's sales improved marginally. The amount of sales in June fell 48% from the same period last year, 12 percentage points lower than the previous month, and 25% higher than the previous month. The first and second lines of the company's land storage account for 87%. With the continuous relaxation of local property market policies, the gradual improvement of epidemic prevention and control situation and the improvement of the company's sales volume in the second half of the year, the company's sales are expected to enter the channel of continuous improvement.
Take the land cautiously and actively raise funds to ensure the safety of cash flow. The company acquired a total of 6 new projects from January to June, with a land acquisition amount of about 6.58 billion yuan and a land-to-sales ratio of 10%. The overall attitude of land acquisition in the first half of the year was more cautious. Among them, in the second batch of concentrated land auction in Qingdao in June, the company acquired two plots in Huangdao District at the reserve price. The company is still one of the few private real estate enterprises that participate in the concentrated land auction. The company actively issued bonds to ensure the safety of cash flow. In June, it successfully issued 500 million domestic corporate bonds with a coupon rate of 5.5% and a maturity of 2-2 years. The corporate bonds created credit protection tools for the first time. In the same month, senior executives of the company bought corporate bonds in the secondary market, with a total purchase amount of 78 billion yuan, to convey to the market their confidence in the company's development prospects.
The expansion of agent construction business has been accelerated. In 2021, the newly established agent construction business platform Xuhui construction management ushered in accelerated development. In the first half of this year, the company acquired 29 new agent construction projects, with a significant increase in number, including 4 government construction projects, 21 commercial construction projects and 4 capital construction projects, achieving full coverage and breakthrough in the business model. By the end of June, Xuhui had a total of 35 projects under management, with a total of 7 million square meters in the total construction area, distributed in first-and second-tier key cities. The accelerated expansion of the agent construction business shows that the company has been fully recognized by the market in terms of brand and professional capabilities, and the agent construction business will also become an important starting point for the transformation of the company's light assets, as well as a new profit growth point.
Keep the buy rating and target price unchanged at HK $8.61. We estimate that the core EPS of the company from 2022 to 2024 will be 0.87, 0.95 and 1.04 million respectively. The company pursues long-term doctrine, sound operating finance and safe cash flow, and is expected to enjoy the improvement of the competition pattern and the repair and improvement of valuation after the clearing of the industry. We keep our buy rating and target price unchanged.
Risk tips: sales and performance carry-over may not meet expectations; policy relaxation is not as expected; the epidemic situation is repeated.