The company disclosed its 2018 semi-annual report. The company achieved total operating income of 1,414 million yuan, an increase of 89.74% over the previous year; realized net profit attributable to shareholders of listed companies was 183 million yuan, an increase of 106.48% over the previous year. The main reason was the increase in real estate carry-over area and the addition of Junhai's online business (that is, the gaming sector) compared to the previous period.
Sales have been reduced, and the pace of new construction has been accelerated. The contract sales amount for the company's real estate projects was 943 million yuan, a decrease of 38.10% over the previous year, and the average sales price was about 9,642 yuan/square meter; the new construction area was 144,300 square meters, an increase of 100% over the previous year. The company's projects were mainly located in Wuhan, Qingyuan and Shaoxing, and the regional market was well diversified. The company added 57,300 square meters of land, with a total construction area of about 100,000 square meters, located in Shangyu District, Shaoxing City. The company added land storage to ensure the steady development of the real estate sector in the future.
Revenue from the real estate sector supports performance, and lightweight transformation with low leverage. The company's real estate sector achieved operating income of 1,067 million yuan and net profit attributable to shareholders of listed companies of 135 million yuan. The company's current interest-bearing debt is mainly about 600 million yuan in bonds, and the level of leverage is low.
Actively promoting transformation and upgrading, the game sector is operating well. The company initially formed a dual business development model for the real estate business and the game business, and distributed a number of boutique mobile games such as “Battle for Immortals” and “Blue Cloud Tips”. The gaming sector achieved operating income of 348 million yuan, net profit of 93.36 million yuan, and net profit attributable to shareholders of listed companies of 47.98 million yuan.
Profit compensation terms: Junhai Network's net profit after tax in 2017, 2018, and 2019 (calculated based on net profit and loss after deducting non-recurring profit and loss attributable to shareholders of the parent company) was 130 million yuan, 169 million yuan, and 219.7 million yuan respectively.
The first coverage gave the company an “increase in holdings” rating. The 2018, 2019, and 2020 EPS are expected to be $0.54, $0.62, and $0.65, respectively. The current stock price corresponds to 8.1 times, 7 times, and 6.7 times PE in 2018, 2019, and 2020, respectively.
Risk warning: The real estate industry is subject to declining regulatory factors; the carry-over of real estate projects falls short of expectations; the development of the gaming sector falls short of expectations.