The operating income maintained a high growth, but the net profit was not optimistic. In the first half of 2015, the company's total operating income was 671.23 million yuan, up 21.22% from the same period last year, the total operating cost was 479 million yuan, up 30.06% from the same period last year, and the total profit was 77.67 million yuan, down 11.57% from the same period last year. The net profit belonging to shareholders of listed companies was 4.701 billion yuan, down 23.20% from the same period last year, and earnings per share was 0.065 yuan, down 22.62% from the same period last year. The increase in operating costs exceeded the increase in revenue, forming the most important squeezing force on profits and dragging down the gross profit margin of the real estate business by 5.15 percentage points compared with the same period last year. The faster rise in operating costs is due to the price reduction promotion adopted by enterprises to promote the return of funds.

Differentiation of project profitability and inventory removal capacity. Based on the analysis of the operation of the subsidiaries which had an impact on the company's net profit of more than 10% in the first half of the year, it can be found that the net profits of Moshuihu Real Estate and Yaojiang Shenma in Wuhan are positive, 78.49 million yuan and 19.55 million yuan respectively. Tianxiang Huating's net profit was-22.63 million yuan, the company's total profit for that year was 77.67 million yuan, and the combined net profit of the three branches accounted for 97.1%. The highlight of the company this year lies in its good grasp of the Wuhan market, and the two branches in Wuhan alone contribute most of the profits. From the point of view of inventory removal, the project sales match the profit contribution of the first half of the year, and the carry-over area accounts for the largest proportion in Wuhan.

Increase revenue and reduce expenditure to benefit cash flow. The company continues to emphasize the great role of sales, improving work efficiency and destocking speed by optimizing organizational structure and workflow. In the first half of the year, the company achieved a sales contract amount of 789.04 million yuan and a payback amount of 769.47 million yuan, effectively improving the company's liquidity. At the same time, the company has achieved remarkable results in strictly controlling expenses, reducing sales expenses by 0.17%, management expenses by 24.08%, and replacing higher-cost trust funds of 400 million yuan by using a project loan of 509 million yuan with lower cost. to further reduce financial expenses. On the whole, in view of the increase in costs caused by the increase in sales area can not be reduced, the company's method of increasing revenue and reducing expenditure is undoubtedly a positive response to the market.

The new construction area sends a positive signal. In the first half of 2014, the enterprise had no new construction area and was in a state of complete destocking, with a new construction area of 318800 square meters for the whole year, and continued this trend in the first half of 2015, with a new construction area of 117000 square meters. Since the market improved in the fourth quarter of 2014, new construction projects have sent positive signals, indicating that enterprises are optimistic about the current round of market conditions.

The goal of rising housing volume and falling prices to protect income is more clear. In the first half of the year, the company realized the sales contract value of 789.04 million yuan, down 4.4% from the same period last year. According to categories, the average settlement price of residential business as the main product is 7694.11 yuan, a slight decrease of 2.74% over the same period last year, and the sales area is 99600 square meters, an increase of 2.89% over the same period last year. The increase in volume and price reflects the company's sales strategy of destocking. The proportion of shops and other sales fell to 2.88% from 7.21% in 2014, while prices were 43.88% and 25.79% lower than the same period last year, respectively, and the sales area was not very optimistic, from 1800 and 10900 in the first half of 2014 to 1400 and 5300 square meters in the first half of 2015. The sales concentration of residential business has further increased. It also shows the weakness of other businesses other than residential real estate business. We believe that the company's residential real estate business is expected to benefit from the recovery of the industry as a whole this year, while the company's deep ploughing in Wuhan is expected to bring it stable income, and other regions can follow Wuhan's push model to continue its inventory removal process. This year's full-year net profit is still expected to be the same as last year or a small increase.

The key cities are expected to return the company's cash in exchange for price. The importance of the company's current layout of cities is measured by the project area, which is ranked as Qingyuan, Wuhan, Shaoxing and Qingdao. As of the first half of 2015, the sales area of the Qingyuan Wuzhou project, the largest project developed by the company, accounted for only 15.66% of the planned construction area, while the unsold area of the two projects of Yaojiang Shenma and Moshui Lake in Wuhan still accounted for 42.77%. If the sales policy of rapid destocking in the first half of the year is continued, the sales area is expected to grow further in the second half of the year to support further revenue growth and cash recovery.

Conclusion:

The company has a first-class cost control advantage, and has an obvious willingness to accelerate turnover by removing inventory. It improves profitability from the perspectives of expanding revenue scale and reducing controllable costs. The successful destocking in Wuhan provides other branches with successful sales experience. The overall recovery of the industry will also become an opportunity for the company to withdraw cash and accelerate development. We expect the company's operating income from 2015 to 2017 to be 2.332 billion yuan, 2.799 billion yuan and 3.078 billion yuan, respectively, and earnings per share of 0.22,0.29,0.36 yuan, respectively, corresponding to PE of 35.40,26.39 and 21.53 respectively.