The company's performance has declined. According to Kerry statistics, the company's real estate sales in the first half of the year was 9.22 billion yuan, with a sales area of 918,000 square meters. The operating income in the first half of the year was 2.38 billion yuan, down 20.3% from the same period last year, mainly due to the decrease in the number of real estate delivery projects in the current period, of which project revenue in Chongqing was 1.24 billion yuan, down 40.5% from the same period last year; and revenue in Wuhan was 930 million yuan, an increase of 38.2% over the same period last year. The net profit of home ownership was 110 million yuan, down 12.1% from the same period last year. The company's performance in the first half of the year fluctuates greatly compared with the whole year, so it does not have a typical reference. The amount of accounts received in advance in the first half of the year reached 8.95 billion yuan, although it decreased by 3.7% compared with the same period last year, but the total amount still has a certain guarantee for future settlement performance.
Profitability has declined slightly and leverage has increased significantly. The company's gross profit margin in the first half of the year was 20.1%, down 1.0 percentage points from the same period last year. The gross profit margin of the company's real estate business and special purpose vehicle business both decreased to 17.7% and 27.3% respectively, while the net return to the company was 4.7%, down 0.4 percentage points from the same period last year. In the first half of the year, the asset-liability ratio of the company was 79.8%, and the net debt ratio was 130.1%.
We will continue to develop dual-main industries and focus on the distribution of real estate in the core first-and second-tier cities. The company's main business is real estate development and special vehicle manufacturing. At present, the company's real estate development projects are mainly distributed in Chongqing, Chengdu, Wuhan, Shanghai, Nanjing, Hangzhou, Suzhou and other key cities for economic development. In the first half of this year, the company added seven new projects through auction and joint acquisition of land, all of which are located in the core cities, with a total construction area of about 1 million square meters.
Up to now, the total land reserve construction area of the company has reached 4 million square meters. The company's special-purpose vehicle business is widely used in transportation, fire fighting, communications, radio and television, and the military and other fields. As the largest research and development, production and sales base of bulletproof armored vehicles in China, its market share remains in the forefront of the country and has been rated as the top 50 industrial enterprises in Chongqing for many years.
Financial forecasts and investment suggestions
Maintain the buy rating and lower the target price to 7.16 yuan (the original target price is 8.52 yuan). Due to the higher-than-expected sales of the company's Ha King Bay project, we slightly increased the real estate settlement income; the corporate income tax expense rate decreased in 2017, and we lowered the income tax expense rate assumption, so we forecast that the company's EPS for 2017-2019 will be 0.39 EPS 0.46 soybean 0.70 (the original forecast for 2018 is 0.38 Universe 0.42 yuan). According to the comparable Company Law, we value the company's special purpose vehicle business 32x and real estate business 18x in 2017, equivalent to a comprehensive target price of 7.16 yuan.
Risk hint
Real estate sales and settlement are not as expected.
Sales of the special-purpose vehicle business fell short of expectations.