Event: the 14-year annual report released by Huayuan Real Estate (600743) showed that the operating income was 6.76 billion yuan, an increase of 42.96% over the same period last year, and the net profit attributable to it was 662 million yuan, an increase of 0.85% over the same period last year. Basic earnings per share is 0.36 yuan.

Comments:

The 14-year net profit of the company is basically the same as that of last year. In 2014, the company achieved operating income of 6.76 billion yuan, an increase of 42.96% over the same period last year, of which the carry-over income of the real estate business was 6.749 billion yuan, an increase of 43.96% over the same period last year, mainly due to the increase in settlement area during the reporting period. The net profit attributed to the shareholders of the parent company was 662 million yuan, an increase of 0.85% over the same period last year. Basic earnings per share is 0.36 yuan. At the end of the period, the company's total assets were 20.452 billion yuan, up 15.85% from the same period last year, and the net assets were 3.865 billion yuan, up 12.96% from the same period last year.

The company plans to pay a cash dividend of 1.2 yuan (including tax) for every 10 shares.

Affected by the delayed opening of the project, the growth rate of sales slowed down for 14 years. In 14 years, the sales contract value of the company was 5.77 billion yuan, an increase of 2.85% over the same period last year; the sales signed area was 512000 square meters, an increase of 0.79% over the same period last year; and the average sales price was about 11263 yuan per square meter. 72% of the residential products contracted by the company are less than 90 square meters, 20% are 90,144 square meters, and 8% are above 144 square meters. Due to the adjustment of planning and design of Beijing Mentougou project and Hefei project, and the policy housing of Lanyue project due to the government price adjustment and other factors, the opening time of the company's sales contract growth plan in 2014 was affected to a certain extent. It is expected that with the increase of available resources in 15 years, sales will improve significantly.

The progress of development and land acquisition are relatively cautious. In the past 14 years, the company has resumed construction of 2.325 million square meters, an increase of 12.54 percent over the same period last year, of which 562000 square meters were newly started, a decrease of 25.17 percent over the same period last year, and 692000 square meters were completed, an increase of 124.68 percent over the same period last year. During the year, the company acquired two projects in Beijing and Xi'an through competitive bidding, with a total land reserve of about 228000 square meters, and the acquisition of land was very cautious. At the end of the period, the total reserve area of undeveloped and developed real estate is about 2.494 million square meters, of which the real estate area to be developed for sale is about 2.273 million square meters, and the property area for rental and operation is about 221000 square meters.

The debt level is reasonable and the financing cost is properly controlled. At the end of 2014, the company's asset-liability ratio was 79%, and the debt level was 62% after deducting accounts received in advance. The financing balance at the end of the period was 10.085 billion yuan, including 5.207 billion yuan for bank loans, 3.361 billion yuan for shareholders and 1.517 billion yuan for trust and other financing. In 2014, the weighted average financing interest rate of the company was 9.09%, and the highest project financing rate was 10% / year, and the financing cost was properly controlled.

Profit forecast and investment advice: the company is expected to have a relatively sufficient supply of saleable goods in 15 years, and sales will pick up to a certain extent; accounts received in advance at the end of 14 years will reach 3.475 billion, with high performance lock-up. It is predicted that the EPS of the company from 15 to 16 years is 0.41 yuan and 0.50 yuan respectively, and the corresponding stock price PE is 17 times and 15 times respectively. Give the company a "cautious recommendation" investment rating.

Risk hint. Sales are lower than expected