The settlement income was relatively small in the first half of the year. The company recently released its mid-2010 report: operating income was 330 million yuan, down 1.2% from the same period last year; operating profit was 115 million yuan, up 3.64% from the same period last year; net profit belonging to the parent company was 86 million yuan, up 0.41% from the same period last year; earnings per share was 0.11 yuan and net assets per share was 1.01 yuan.
The developer of the complex in Shandong. The company completed the asset restructuring at the end of 2008, and the major shareholders and their related parties injected into the real estate business. The company's project reserve planning construction area is about 4 million square meters, and there are three main projects, all of which are large-scale urban complexes of more than 1 million square meters, namely, Jinan Zhongrun Century City, Weihai Korea window, Zibo Zhongrun overseas Chinese Town. The company set up Qingdao Company in March 2009, ready to enter Qingdao area and further optimize the layout of the project.
The interim performance was mediocre. The company's three major projects in Jinan, Zibo and Weihai were developed at the same time, and the income of the three places in the first half of the year was 1.86,1.21 and 24 million yuan respectively, an increase of 25%, 23% and-73% respectively over the same period last year. The gross profit margin of the real estate settlement business during the reporting period was 56%, an increase of 9.9% over the same period last year, mainly due to changes in the settlement structure of the project.
Sales are good in the first half of the year. In the first half of the year, the company received 710 million yuan in cash for selling goods and providing services, an increase of 35.5% over the same period last year; in the second quarter, it was 396 million yuan, up 26% from the previous quarter. The company reported that the balance of the amount received in advance at the end of the period was 1.109 billion yuan, an increase of 52% over the beginning of the year, mainly due to the fact that the sales payback amount was greater than the carry-over income amount.
The comprehensive profitability is strong. The company's strong profitability (gross profit margin more than 45%) mainly comes from the lower land cost, which benefits from the earlier acquisition of land and the complex super-market model.
Short-term solvency is relatively inadequate. The company's real asset-liability ratio after reporting the amount received at the end of the period is 52%, slightly higher; short-term loans and non-current liabilities due within one year total 260 million yuan, paper cash is only 90 million yuan, short-term financial risk is greater. The operating cash flow in the first half of the year was-135 million yuan, mainly due to the strengthening of project construction.
Maintain the overweight rating. We expect the company to earn 0.38 yuan and 0.58 yuan per share in 2010-2011. based on yesterday's closing price of 6.18 yuan, the corresponding dynamic price-to-earnings ratio is 16 times and 11 times respectively, and the valuation level is moderate. taking into account the company's layout of Shandong key cities, complex super-market model, strong profitability and good growth, we maintain the company's "overweight" rating; the risk lies in the relative lack of short-term solvency.