Events. The company released its quarterly report for the first quarter of 2019. In the first quarter of 2019, the company achieved operating income of 6.77 billion yuan, an increase of 342.5% over the same period last year; net profit belonging to shareholders of listed companies was 1.31 billion yuan, a substantial increase of 227.97 times over the same period last year; and fully diluted earnings per share was 0.26 yuan.
Revenue increased by 342.5% in the first quarter of 2019, driven by an increase in property carry-over; over the same period, the company's gross profit margin was high, which led to a 227.97-fold increase in net profit. On April 26, 2019, the company announced that from January to March 2019, the company had 31 major development projects, 1 newly started project, 1 newly completed project, and no new project reserve. In the first quarter of 2019, the company has signed a total sales area of 79500 square meters, with a contracted sales amount of 4.93 billion yuan. At the end of the first quarter of 2019, the company's rental income was 148 million yuan.
Investment advice. To real estate development and integrated service provider transformation, "better than the market" rating. The company takes real estate development and operation as its main business, and gradually transforms from traditional real estate developer to real estate development and integrated service provider. Through the implementation of asset restructuring, the company has solved the problem of inter-industry competition that has plagued the company for many years; optimized the company's operation and management level and governance structure by introducing China Resources Land Holdings and Ping an Real Estate as strategic investors; and by injecting high-quality assets, especially high-quality resources in the Shanghai region to supplement the company's project reserves. We estimate that the EPS of the company in 2019 and 2020 is 0.60 yuan and 0.71 yuan respectively. We give the company a dynamic PE of 11-14 times in 2019, with a reasonable value range of 6.60-8.40 yuan, maintaining the company's "better than the market" rating.
Risk hint: the company faces two major risks: interest rate hike and policy regulation.