The company released its mid-2009 report. In the first half of 2009, the company achieved operating income of 291 million yuan, down 1.48% from the same period last year; the total profit was 12 million yuan, and the net profit was 8 million yuan, down 51.94% and 44.52% respectively from the same period last year. The decrease in profit was mainly due to the decline in operating gross profit margin, which was only 24.87% in the first half of 2009, down 10.38 percentage points from the same period last year.
The real estate sales market picked up in 2009, but as the company's main settlement project changed from villas in the middle of last year to ordinary housing in this period, and the company's available sales projects were limited, the company's real estate sales performance was average, the company's real estate sales revenue in the first half of 2009 was only 103 million yuan, a year-on-year decrease of 25.17% and a gross profit margin of 38.09%, a decrease of 9.35 percentage points over the same period last year.
Although the company's real estate development business started early, the recruitment, auction and hanging land transfer system increased the cost of land reserve. Restricted by the company's development scale and financial strength, in recent years, the company's ability to obtain land reserves has declined, the expansion ability has been hindered, the real estate development business has gradually shrunk, and the real estate sales income has declined year by year.
Since 2006, the company has only added one new real estate project-Shantou Jinhu Road Project in July 2008, covering an area of 8400 square meters and increasing the land reserve by about 30800 square meters (building area). The company's current land reserve planning construction area of 442100 square meters, in addition to the Shantou Jinhu Road project, Shenzhen East Lake Dijing Mingyuan project and Shenzhen Shuiyuntian Ya Mingyuan project, the company's other projects (excluding Shantou Xinfeng Building) are expected to be completed around 2009. The total construction area of Shantou Jinhu Road Project and other three projects is only about 270000 square meters, which is only enough for the company to develop for about two years according to the company's existing development capacity.
The company's resource bottleneck still exists, and there are hidden worries for sustainable development.
It is estimated that the company's earnings per share from 2009 to 2011 are 0.033 yuan, 0.042 yuan and 0.029 yuan respectively, and the discounted RNAV per share is 1.94 yuan. In terms of the company's fundamentals, the current stock price is too high, but considering the company's local state-owned background and relatively high-quality shell resources, we gave the company an overweight rating on June 11, 2009, with a six-month target price of 6 yuan. After the current round of market and real estate industry adjustment, the company's share price fell from 6.95 to 5.05 yuan. We believe that the main supporting factor of the company's share price is investors' expectations of the company's restructuring. If the company's stock price continues to fall, the lower the restructuring cost, the greater the possibility of restructuring. Therefore, we maintain the overweight rating of the company.