The company is the largest real estate listed company in northwest China, the major shareholder is the Xi'an High-tech Zone Real Estate Company, and the actual control is the Xi'an High-tech Zone Management Committee. the background of the company's major shareholders and actual controllers provides convenient conditions for the company's development in Xi'an, and the company will still benefit in the future.
The company acquired land for most of its projects earlier and cost less, and benefited from the rising trend of house prices in 2009 and 2010, resulting in a sharp increase in the company's comprehensive gross profit margin. Assuming that the average selling price falls by 15% and 20% in the future, the company's projects still have a substantial gross profit margin.
The company has plenty of resources to sell. By the end of August 2011, the company has unsettled project reserves of more than 1.8 million square meters, and the planned completion area in 2011 is 374400 square meters. It is assumed that the settlement area will increase by 30% per year, and the project reserves can be used for settlement for more than 3 years.
This year's settlement projects are basically unaffected by regulation and control policies. As the main projects to be settled by the company this year are Lanting Fangnan District, Tianjin Jiuxuan, Fenglin Yishu Phase II Section A, Ink 30 degrees Phase 2 and other projects, basically sold in last year and the first half of this year, the impact of regulatory policies on the company's performance this year is very small.
Accounts received in advance are highly locked in future performance. At the end of the third quarter of 2011, the company's prepaid balance was 3.022 billion yuan, accounting for 187% of our forecast 2011 operating income.
Our profit forecast leaves plenty of room for the decline in the average settlement price and trading volume in the future, the forecast for gross profit margin is also relatively conservative, and the company's stock price has a high margin of safety. in addition, the selective settlement of the high-tech international business center and Sejia Star City project will likely make the company's performance exceed expectations. The market capitalization of the company is medium (3.147 billion yuan), the balance of advance payment is close to the market value, and it will enter the performance release period this year and next year.
We forecast that the company's EPS in 2011 and 2012 will be 0.50 yuan and 0.63 yuan respectively, corresponding to the previous trading day closing price of 4.27 yuan, dynamic price-to-earnings ratio of 8 times and 7 times respectively, maintaining the company's "overweight" investment rating.
Risk hint: the risk that the real estate regulation lasts longer than expected; the average settlement price and settlement progress of the company's project are significantly lower than the expected risk.