Event
According to Carey data, the company's July sales volume is 16.1 billion yuan. On July 26, the company launched a new round of organizational structure adjustment and announced the establishment of four major platforms: real estate development platform, commercial platform, agent construction platform and functional platform. Ru Hailin, former president of Southeast Regional Group, was promoted to CEO, in charge of real estate development platform, CEO Lin Feng in charge of commercial platform and functional platform, and Executive Director Chen Dongbiao in charge of construction platform.
Brief comment
Sales in July continued to improve. The company's sales in July totaled 16.1 billion yuan, down 23% from the same period last year, sharply narrowing the decline in June by 25%, while increasing by 19% compared with the previous month, continuing the improvement trend of sales in June. The cumulative sales volume from January to July was 79.2 billion yuan, down 50% from the same period last year, which was 4 percentage points lower than that in January-June.
The first and second lines of the company's land reserves account for 87%. With the continuous relaxation of local property market policies and the improvement of sales volume in the second half of the year, the company's sales are expected to pick up steadily.
Implement equity incentives to convey long-term development confidence. On July 26, the company granted 300 million stock options to no more than 300 middle and senior managers, accounting for 3.28% of the total share capital, with an exercise price of HK $2.51, valid for 3.75 years. The exercise conditions of the stock option are as follows:
1, the company's in-service employees; 2, the price per share is HK $6. The price corresponding to the exercise conditions has increased by about 139% compared with the exercise price, fully demonstrating the company's confidence in the future development prospects conveyed to the market by practical actions.
Acting to build one of the four platforms of the superior group. This round of organizational structure adjustment is to tie in with the implementation of the company's "3-5 concentric circle" strategy. In particular, the newly established agent construction business plate in 2021, juxtaposed with development and commerce, will be the company's new power point and profit growth point in the future. By the end of the first half of 2022, Xuhui had a total of 35 projects under management, with a total of 7 million square meters in the total construction area. Among them, 29 new agent construction projects were acquired in the first half of this year, with a significant increase in the number, including 4 government agent construction projects, 21 commercial agent construction projects and 4 capital agent construction projects, achieving full coverage and breakthrough in the business model. With new progress in July, the company won two projects in Liangxi District, Wuxi, in conjunction with local state-owned enterprises, and the company will mainly undertake its agent construction business.
Keep the buy rating unchanged. We estimate that the core EPS of the company from 2022 to 2024 will be 0.87, 0.95 and 104 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 unchanged.
Risk tips: sales and performance carry-over may not meet expectations; policy relaxation is not as expected; the epidemic situation is repeated.