Events:
The company announced its mid-year report on August 22nd that during the reporting period, the company's real estate business realized operating income of 3.068 billion yuan, an increase of 41.84% over the same period last year; the company's net profit was 101 million yuan, a decrease of 52.99 yuan over the same period last year; and the net profit attributed to the owners of the listed company was 130 million yuan, a decrease of 44.92% over the same period last year.
Viewpoint:
The company's performance has achieved the largest year-on-year growth in recent years. During the reporting period, the company realized operating income of 3.068 billion yuan, an increase of 41.83% over the same period last year, of which the turnover of real estate projects was 2.811 billion yuan, an increase of 41.97% over the same period last year. The contract sales area of the real estate business reached 603000 square meters, an increase of 26.1% over the same period last year; the contract sales amount reached 6.231 billion yuan, an increase of 32.4% over the same period last year.
The company recovered 5.416 billion yuan of funds, an increase of 42.1% over the same period last year.
During the period, as the company increased its land acquisition efforts in first-and second-tier cities, land transactions were more concentrated, so the financial costs arising from financing increased by 193.26% compared with the same period last year, coupled with a decline in gross profit margin of settlement projects. As a result, when revenue increased by 41.84%, net profit decreased by 44.92% from 236 million yuan in the same period last year, to only 130 million yuan. There is no lack of doubts about the company's "crazy" land acquisition behavior, but we are optimistic about it. It is mainly based on three considerations: financial advantage to show strong capital, joint development with industry leaders, and flexible conversion of investment income and project development income. Relying on the parent company, the company has a strong advantage in the source of funds, and in the follow-up development, the company immediately introduced experienced developers in the region to jointly develop, complementary advantages and enhance revenue. The company plays the role of a financial investor to some extent.
Take the Shanghai Xinjiangwan City Land King project as an example, a month after taking the land, the company issued a notice saying that it was developed in cooperation with Taihe Group, and Taihe Group's "courtyard series" high-end villa products are well-known in the industry. thanks to the "strong combination" of financial advantages and product advantages, coupled with the golden location and scarcity of the project, we believe that there will be a huge profit margin for this project, which has been positioned as a high-end product.
The group cooperates with the characteristic financial real estate leader. Cinda Real Estate is the only child of China Cinda, a central enterprise in the real estate field. the cooperation with the parent company makes the company's business thinking very different from that of ordinary developers, for example, from a higher point of view of asset allocation when making land acquisition decisions. rather than based on the development costs of traditional real estate projects. At the same time, high-quality land resources also provide an excellent asset choice for the asset allocation of Xinda Group, with a more stable value preservation effect.
With the support of the parent company, the company has diversified access to funds by means of "Cinda Department" entrusted loans, joint establishment of real estate investment funds and private placement of bonds, which provides sufficient financial guarantee for the company's land layout and business development. At present, many of the company's projects are "regional company + regional company establishment / equity fund" cooperation mode.
The cost of capital has been significantly reduced. The issuance of low-interest long-term bonds has effectively reduced the overall financing cost of the company, the financing term structure has also been further optimized, and the proportion of long-term financing has increased significantly. A variety of other financing channels operate smoothly and harmoniously, fully ensuring the normal operation of various investments and realizing the safety, stability and order of fund management in the stage of high debt ratio.
Conclusion:
As China Cinda's real estate development business operation platform, with the help of China Cinda system resources, the company strengthens the group coordination, and the business model and profit model have been innovated and developed continuously. In terms of business model, the company is expanding from simple real estate development to real estate investment and professional services, and strives to create a financial real estate model with Cinda characteristics; in terms of profit model, from the original simple profits from project development to diversified sources of income such as development profits, investment income and supervision and construction income. With the further development of China Cinda in the future, the synergy of sharing business, customers, brand resources and organizational network will further appear, which will provide the company with a broader space for development.
We expect the company's operating income from 2016 to 2018 to be 12.447 billion yuan, 18.049 billion yuan and 24.366 billion yuan respectively, and earnings per share of 0.62 yuan, 1.03 yuan and 1.33 yuan respectively, corresponding to a PE of 9.22,5.55 and 4.27 respectively.
