The company released its three-quarter report in 2018, with operating income of 7.08 billion yuan from January to September, an increase of 75.3% over the same period last year, and net profit of 758 million yuan, an increase of 209.7% over the same period last year.
The performance is released and continued, and sales still need to work hard: the reason for the substantial increase in the company's performance is as follows: 1. The settlement in the first three quarters is mainly driven by major projects such as Tianyu Garden C2, Zhongzhou Jincheng Lake Shore Phase 1 and Junting late market, and the settlement income of real estate development business has achieved rapid growth. 2. Most of the settlement items are projects with high gross profit margin. In the first three quarters, the comprehensive gross profit margin increased by 9.6 percentage points over the previous year to 45.9%, helping to increase the net return rate by 3.6 percentage points to 10.7%. The company achieved a cumulative sales amount of 8.44 billion yuan in the first three quarters, an increase of 54% over the same period last year. The low target completion rate of the company is mainly due to the delay in the pre-sale license management of the push rhythm. In terms of sales regional structure, Huizhou is still the region with the highest sales contribution of the company, accounting for 42%. In addition, sales in Shanghai, Chengdu and Qingdao account for 28%, 18% and 11% respectively.
The pace of land acquisition has slowed down, and the increase of major shareholders' holdings shows confidence: from January to September, the company paid 4.84 billion yuan in cash for goods and services, a decrease of 59.5% over the same period last year, a decrease of about 45 percentage points compared with January-June. The expenditure on land acquisition decreased significantly, and the pace of land acquisition slowed down. In terms of debt level, the pressure on short-term debt of companies rose further in the third quarter, rising 0.6 to 1.65 at the end of the third quarter from the beginning of the year. While the pace of land acquisition slowed, the net debt ratio improved, falling about 18 percentage points from the beginning of the year to 152%. In addition, the controlling shareholder Zhongzhou Land has increased its total share capital by 1% in May and August this year, demonstrating shareholders' confidence in the future development of the company.
Substantial progress has been made in "real estate + finance". The three-dimensional incentive mechanism has taken shape: 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.