The company released its three-quarter report in 2018, with operating income of 9.401 billion yuan from January to September, down 13.6% from the same period last year, and net profit of 1.012 billion yuan, up 68.7% from the same period last year.
Settlement slowed down in the third quarter, and high gross profit projects continued to promote high net profit growth: the reasons for the company's revenue reduction in the first three quarters were as follows: 1. The completed area in the first three quarters decreased by 67% compared with the same period last year, affecting the settlement progress of the project. 2. The settlement of high-margin projects in East China pushed up the company's overall gross profit margin. The gross profit margin of the real estate development business in the first three quarters was 37.61%, an increase of about 17 percentage points over the previous year. After deducting the impact of the three rates and the increase in land tax, the net profit rate of homing still increased by 1.41 percentage points over the previous year to 10.76%. In terms of signing contracts, the company signed a contract of 17.364 billion yuan from January to September, an increase of 11.87% over the same period last year, and has achieved the annual sales target of about 70%. It is worth looking forward to achieving the annual target.
The soil storage structure has been optimized, and the investment layout has moved towards the goal: the land reserve has increased by 8033 million square meters in the first three quarters, an increase of 168.7% over the same period last year. The company's land acquisition slowed in the third quarter after high land growth in the first half of the year. From the perspective of the regional distribution of land acquisition in the third quarter, the company's focus is still on East China with Shanghai as the core, and continues to carry out layout in the central and western regions, winning projects in Nanning and Chongqing respectively, and the regional layout is further optimized; from the perspective of the energy level structure of land acquisition, the first, second and third lines of the company accounted for 63%, 17% and 20% respectively in the first three quarters. In the future, the company's investment layout will gradually move towards the goal of 50% in Shanghai, 25% in Jiangsu and Zhejiang, and 25% in other regions of the country.
Innovative financing channels, the debt level has increased: the company issued no more than 3.5 billion yuan of perpetual bonds was registered in July, and issued the first phase of 600 million yuan of perpetual bonds in August, and plans to set up an asset support plan in October. Issue no more than 1 billion yuan of asset-backed securities. By the end of the third quarter, the company's net debt ratio was 184%, and the pressure on short-term debt was 1.25, up 51 percentage points and down 0.05 respectively from the beginning of the year. We believe that relying on the resources and platform advantages of major shareholders and actively exploring innovative financing channels, the company will provide a long-term, stable and high-quality source of funds for its own access to resources and sustainable growth.
Profit forecast and investment rating: we expect the company's EPS to be 0.90 yuan in 2018 and 1.00 yuan in 2019, maintaining a "buy" rating.
Risk tips: the regulation of first-and second-tier cities continues, settlement is not as expected, and so on.
