The company released its 2018 semi-annual report, with operating income of 5.948 billion yuan from January to June, an increase of 82.4% over the same period last year, and a net profit of 718 million yuan, an increase of 374.5% over the same period last year.
Accelerated release of performance and outstanding sales performance: the reasons for the sharp increase in the first half of the year are as follows: 1. The number of settled real estate projects increased over the same period last year. 2, the settlement income of the real estate development business increased by 86.1% compared with the same period last year. 2, most of the settlement projects were projects with high gross profit margin, and the comprehensive gross profit margin rose 8.4 percentage points to 44.7% in the first half of the year compared with 2017. It is expected that the company's faster settlement pace will continue into the second half of the year, and the homing net profit from January to September is expected to increase by 162.5% 212.5% compared with the same period last year. From January to June, the company achieved sales of 5.954 billion yuan, an increase of 90.7 percent over the same period last year, and achieved 35.7 percent of the annual sales target, with a sales area of 52.01 million square meters, an increase of 110.7 percent over the same period last year, and 44.1 percent of the annual sales target. The company's sellable projects in the second half of the year are still concentrated in Huizhou, Chengdu, Shanghai and Qingdao. Although the regulatory environment of mainstream cities in the second half of the year is hardly loose, the probability of further tightening is also very low. Under the current policy intensity, transactions in key cities since the third quarter are also being repaired, so we believe that the company is expected to achieve its annual sales target under the high sales growth rate.
Major shareholder assets injected into the halberd, short-term debt pressure increased: from January to June, the company in Chengdu, Guangzhou, Huizhou, Dongguan, Jiaxing, a total of 176,000 square meters of new land, a new capacity area of 551,000 square meters, a decrease of 22.3 percent and an increase of 11.2 percent respectively over the same period last year. Although the plan of injecting assets into the company by Zhongzhou Group, a major shareholder, failed in May, we can still see the determination of major shareholders to tilt the company's resources to make the listed company bigger and stronger. We believe that the group's major shareholders are rich in old reform resources in Shenzhen, and it is still worth looking forward to the improvement of the company's resource potential in this area in the future. In the first half of the year, the pressure on short-term debt rose 0.6 to 1.65 from the end of 2017, while the net debt ratio fell to 152%.
Substantial progress has been made in the "real estate + finance" model, with parallel incentive mechanisms: during the reporting period, the company's real estate finance sector continued to advance, and in January, it jointly launched the establishment of an urban renewal investment fund, Songxuan, Tibet, for equity investment, M & An investment and other investment opportunities related to urban renewal. Up to now, some shares in Huizhou Boluo project and Guangzhou Nansha project have been acquired through the real estate fund, and substantial progress has been made. In terms of incentive mechanism, the draft equity incentive plan was announced in March, the incentive period is 4.25 years, and the number of incentive shares accounts for about 3% of the total equity. In addition, the company has a total of 7 investment projects, and the incentive mechanism tends to be improved.
Profit forecast and investment rating: we expect the company's EPS in 2018 and 2019 to be 1.52 yuan and 2.18 yuan respectively, maintaining a "buy" rating.
Risk hint: the real estate regulation and control policy continues and the settlement speed is not as fast as expected.
