Core ideas:

The sales performance of overseas Chinese Town declined in 2021, but remained relatively stable. The combination of literature and tourism and real estate is the basis for the company to create differentiated value. Based on the stable debt structure and financing advantages, it is helpful to ensure that the company uses the combination of industry and finance to maintain land acquisition in the land market and promote steady development.

First, the decline in H1 sales is close to the average of the top 100, and intensive marketing alleviates the pressure of elimination in the first half of 2022. In the first half of 2022, overseas Chinese Town achieved a sales amount of 27.3 billion yuan and a sales area of 1.28 million square meters, down 38% and 42% respectively from the same period last year. Under the background of the general decline in the sales of housing enterprises, the company has strengthened the project turnover efficiency, and a number of projects in South China, East China and West China have been able to achieve 12 months of push sales after the acquisition of land. the total construction period from the start of construction to hardcover delivery of high-level products in some projects is controlled within 24 months. At the same time, overseas Chinese Town actively controlled investment expenditure and acquired two comprehensive land for cultural brigades in combination with the company's business structure in the first half of the year, including one in Songshan Lake area in Dongguan and the other in Longquanyi District of Chengdu.

Second, under the influence of the epidemic, the business income of literature and tourism has declined.

In the first half of the year, the operating income of overseas Chinese Town was 16.396 billion yuan, down 29% from the same period last year; the net profit was 750 million yuan, down 68% from the same period last year; and the net profit from returning home was 110 million yuan, down 93% from the same period last year. Of this total, the comprehensive business income from tourism was 10.55 billion yuan, down 44% from the same period last year, and the income from the real estate business was 5.81 billion yuan, up 44% from the same period last year.

The reasons for the obvious decline in the operating efficiency of the overseas Chinese Town are as follows: first, the decline in the real estate market has led to a higher decline in the company's sales; second, the carry-over of high-priced land has also reduced the gross profit margin and net profit margin; and third, the impact of the epidemic has prolonged the construction period of the project and slowed down the carry-over. and led to the income of some scenic spots, such as Shanghai Happy Valley and Beijing Happy Valley.

III. Financing costs have been reduced, and the scale of interest-bearing liabilities has continued to decline.

The three red lines of overseas Chinese Town all maintain the green level, of which the net debt ratio is 70.5%, the asset-liability ratio excluding accounts received in advance is 67.4%, the cash short-debt ratio is 2.4 times, and the debt repayment pressure is small. The company's financing costs continued to fall to 4.36%, down 10bp from the beginning of the year. From the perspective of financing structure, bank loans are the main source of financing, reaching 103.64 billion yuan, and the average financing cost is between 2% and 6.98%.