Our view: Relying on a strong shareholder background and large customer strategy, the company's first-hand housing agency business scale advantage continued to be maintained in 2018. The company's market share is expected to continue to increase during the consolidation period of high commercial housing sales volume and area across the country. With the accumulation of data in the big data and consulting business, there is huge room for exploration in the future. The second-hand housing brokerage network business is growing rapidly, and business expansion is being promoted through first-hand linkage. We believe that the company's advantages in the real estate agency service industry are obvious, and there is also more room for exploration and analysis of industry big data accumulated in the service process of real estate companies. The company distributed a dividend of 23 HK cents for the first time in the year. The dividend yield under the current stock price is 2%. The current stock price corresponds to 12 times PE in 2018. Investors are advised to pay attention.
Core net profit increased 63% year over year: in 2018, the company's operating profit was 1.4 billion yuan, up 47% year on year, and operating profit margin was 23.8%, up 2.9 percentage points year on year. Guimu's net profit was 950 million yuan, an increase of 170% over the previous year. Excluding the profit impact of the 21 investors of EasyHome Enterprise (China) and the underlying remuneration expenses of pre-IPO shares, the core net profit was 1.1 billion yuan, an increase of 63% over the previous year, and the core net interest rate was 19.2%, an increase of 4 percentage points over the previous year.
The first-hand housing agency business continues to maintain its advantage: the company's marketing business has entered 18 new markets, covered 204 cities across the country by the end of 2018, and the business network has been further expanded. Agency sales amounted to 531.6 billion yuan, an increase of 23% over the previous year. The company has signed strategic cooperation agreements with nearly 30 large-scale housing enterprises. The number of partner companies continues to increase, and cooperation methods continue to expand. The company currently has a rich reserve area of 282 million square meters, and the scale of first-hand housing agency transactions will advance towards trillion dollars in 2019.
Stable and abundant cash flow: As of the end of 2018, the company's book cash totaled 27.4 billion yuan, and total interest-bearing debt was 1 billion yuan. The company's shareholders' equity was greatly increased during the year. The net cash ratio was 22%, and the debt-to-equity ratio dropped sharply by 146 percentage points to 47%. The company is an asset-light agency service platform with stable cash flow and a healthy debt structure.
Risk warning: The slowdown in macroeconomic growth, the tightening of regulatory policies in the real estate industry and fluctuations in the real estate market, the concentration of corporate revenue from several real estate developers, and the upgrading of the real estate data system fell short of expectations.