An overview of the first half of the year. Operating income was 162 million yuan, up 4.12% over the same period last year; operating profit was 42.63 million yuan, up 116.85% over the same period last year; net profit belonging to the parent company was 30.83 million yuan, up 117.01% over the same period last year; and basic earnings per share was 0.16 yuan, with net assets per share of 4.17 yuan. The net profit after deducting non-recurring gains and losses belonging to shareholders of listed companies was 20.56 million yuan, an increase of 46.4 percent over the same period last year.
Small real estate developers backed by Guangzhou State-owned assets Supervision and Administration Commission. The company is mainly engaged in real estate development, investment and property leasing and management, the project is mainly distributed in Guangzhou and Changsha, with the background of Guangzhou SASAC, the operation scale is small. At present, the main projects for sale are the second group of Changsha Pearl River Huacheng project and the Guangzhou Pearl River New Bank apartment project, and the projects under construction are Guangzhou Pearl River New City project (the southern district has been capped and is expected to be pre-sold in October) and Changsha Pearl River Huacheng three group project (expected to be pre-sold by the end of September). Guangzhou Guanglong project and S8 project as well as Changsha site are still under planning.
Net profit increased sharply compared with the same period last year. The sharp increase in net profit compared with the same period last year is mainly due to two points: 1. The increase in gross profit margin. During the reporting period, the company's comprehensive gross profit margin was 42.7%, an increase of 8.7 percentage points over the same period last year, mainly due to the high gross profit margin of the Pearl River Xinan apartment project carried forward during the reporting period (51.43%). 2. The impairment of assets is ready to be washed back. 14.09 million yuan has been earmarked for bad debts during the reporting period, accounting for 33% of the operating profit. After deducting non-recurring gains and losses, the increase in the company's net profit narrowed to 46%.
The financial situation is getting worse. During the reporting period, the company's expense rate was 16.3%, an increase of 3.3% over the same period last year, mainly due to the increase in management and financial expenses caused by increased management and interest expenses. The amount received in advance was 61 million yuan, a decrease of 17 million yuan compared with the beginning of the year. After deducting the amount received in advance, the asset-liability ratio was 53.86%, higher than the average level of the industry. The monetary fund was 329 million yuan, a decrease of 40% compared with the beginning of the year; "short-term loans + non-current liabilities due within one year" was 403 million, and the company was under great pressure to repay its debts in the short term; the net cash flow generated by operating activities was-231 million yuan, 21 million yuan in the first half of 2009 and 137 million yuan in the second half of 2009.
Maintain a neutral rating. We estimate that the company's EPS will be 0.38 yuan and 0.47 yuan from 2010 to 2011. based on the closing price of 9.99 yuan on August 30, the dynamic price-to-earnings ratio is 26 times and 21 times, the valuation level is on the high side, the company has less project reserves, uncertain growth prospects, and maintain a "neutral" rating.
Risk hints: market systemic risk and real estate regulation risk; risk of over-concentration of the market; project development and sales progress may not meet expectations
