Revenue in the first half of 2019 rose 4 per cent year-on-year to 2 billion yuan (the same below). The gross profit margin is about 26% similar to that of last year. Core net profit rose 6 per cent year-on-year to 260 million yuan. The net leverage ratio is about 50%, maintaining a low level in the industry. As of June, the total land storage area is about 6.7 million square meters, and the total saleable value is estimated to be about 122 billion yuan. The company's sales in the first half of the year are about 11.5 billion yuan, down 30% from the same period last year, and the removal rate is about 60%. The company will increase sales efforts in the second half of the year, and the annual sales target will remain unchanged. The company adopts a two-round development strategy at home and abroad, with US assets accounting for about 1/4 of the total assets, accounting for about 11% of the saleable value, and 40% of the equity value, effectively dispersing regional risks. The uncarried-over amount is about 12.3 billion yuan, and the short-term profit locking ratio is relatively high.
Summary of the report
The results in the first half of the year were large to flat. Revenue rose 4 per cent to 2 billion yuan in the first half of 2019 compared with the same period last year. The gross profit margin is about 26%, the same as the same period last year. The operating profit is about 160 million yuan, and the profit margin is about 7.4%, down 6.5% from the same period last year. This is mainly due to Longshi's divestiture of the long-term rental apartment business, resulting in a 51% year-on-year increase in administrative expenses to 390 million yuan. We expect the relevant expenditure ratio to return to normal levels in the second half of the year. Excluding non-core items such as exchange, fair value income from investment properties and proceeds from the sale of subsidiaries, core net profit rose 6 per cent to 260 million yuan compared with the same period last year. The main reason why the growth of core net profit is higher than the operating profit is due to the share of the joint venture performance, and the related income rose 115% to 390 million yuan compared with the same period last year. The net leverage ratio is about 50%, maintaining a low level in the industry. The ratio of cash to short-term debt is about 2.3 times and has good liquidity.
The value of 122 billion yuan is on hand, and we will make efforts in the second half of the year. As of June 2019, the total land storage area (salable part) is about 6.7 million square meters, of which the commissioned development project is about 2.9 million square meters, and the total salable value is estimated to be about 122 billion yuan. The company's sales in the first half of the year are about 11.5 billion yuan, down 30% from the same period last year, and the removal rate is about 60%. The company will increase sales efforts in the second half of the year, and the annual sales growth target will remain unchanged for the time being. Based on the growth target of about 10% at the beginning of the year, the company will reach 30 billion yuan in sales in the second half of the year, which is a major challenge to the executive ability of the management of the company. According to Corey data, Longshi's cumulative sales in the first seven months (full caliber) were about 13 billion yuan, achieving the full-year target of about 30 per cent.
Development at home and abroad, two-wheel drive. Domestically, Langshi uses deep ploughing of the Yangtze River Delta as the core area as its development strategy, and the Yangtze River Delta accounts for about 53% of the 122 billion yuan worth of land reserves. In foreign countries, Langshi has 27 projects in the United States, with a total saleable area of about 610,000 square meters, with a value of about 13.9 billion yuan (or $2 billion), ranking among the top 40 real estate builders in the United States. has entered New York, Los Angeles, San Francisco and other major American cities, focusing on the high-end housing market. At the end of June, assets in the US business accounted for about 1/4 of the company's total assets, about 11 per cent of the saleable value and 40 per cent of the value of equity. In the first half of the year, the sales of American projects were about 1.9 billion yuan, accounting for about 16% of the total sales. Langshi acquired a total of 16 projects in the first half of the year, 8 of which were in the United States, steadily expanding the business territory of China and the United States, and continuously optimizing the strategic layout.
The light asset model has an advantage in adversity. In terms of reducing the risk of project development, the company actively participates in promoting light asset business to reduce the pressure on capital investment, although in the tight real estate market, the rising financial pressure of small and medium-sized developers may bring the push rhythm of light asset projects. but after all, the company has no (or light) investment in the project, the downside risk is limited, and it will not cause a capital chain burden on Langshi. So that the net leverage ratio can be maintained at a low level. As of June 30, the uncarried-over amount was about 12.3 billion yuan, with a high short-term earnings lock-in ratio of about 4 times 2019 price-to-earnings ratio and a dividend yield of about 5%.
Risk tips: monetary tightening affects sales; the domestic property market is tightly regulated; there are relatively few land reserves.