2019H1's revenue was + 19.22% year-on-year, and gross profit margin increased by 23.12pc to 56%.

In the first half of 2019, the company's revenue was 9.141 billion year-on-year + 19.22%, and its net profit was 1.672 billion year-on-year + 100.56%. The overall gross profit margin in the first half of the year was 56.02%, an increase in 23.12pc over the same period last year, mainly affected by the regional structure of real estate carryover. The company's management has been continuously optimized, and the three expense rates have continued to decline. In the first half of the year, the sales, management and financial expense rates have respectively dropped 0.52pc, 1.13pc and 2.62pc compared with the same period last year.

Development plate: the focus of development returns to Shanghai, and gross profit margin is expected to remain high.

In the first half of 2019, the company signed a contract area of 13.57 million square meters, with a contract amount of 6.634 billion yuan, which was + 10.86% and + 155.23% respectively compared with the same period last year. The average contract price is 48900 / sq m + 130.2% compared with the same period last year, mainly due to the increase in the proportion of contracts signed in Shanghai. From a structural point of view, housing volume in Shanghai in the fourth quarter of 2018 and commercial offices in Shanghai entered the market in the first quarter of 2019. Considering the rapid increase in the share of sales in Shanghai, gross profit margin is expected to remain high in the future.

Leasing plate: increase the holding scale, Binjiang Qizi started construction in an all-round way to build Lujiazui financial port.

In the first half of 2019, the company rented 327309 square meters of construction area, down 16.39% from the same period last year, and the rental business income was 304 million, down 2.56% from the same period last year, mainly due to the redecoration of Huaihai apartment.

The company's "Lujiazui North Binjiang-East Bund" is the starting point, and the Lujiazui financial port is composed of "Seven sons on the Binjiang River of China Enterprises", with a total planning area of about 370000 square meters (including 70,000 square meters of Yang Pudong Bund and 300000 square meters of Lujiazui North Binjiang). At present, all construction has been started and is expected to enter the market one after another from 2020.

The net debt ratio is still low, there is room for follow-up leverage, and the financing advantage continues to highlight.

In the first half of 2019, interest-bearing liabilities increased by 380 million to 15.87 billion, cash on hand decreased by 3.37 billion to 14.24 billion, and the net debt ratio increased to 9.92% from the end of 2018, which is still at a low level, and there is room for subsequent leverage. The ratio of short-term cash to debt is 4.28, up 1.73 from the end of 2018. There is plenty of cash on hand and less pressure on short-term debt repayment. In the first half of 2019, the weighted average financing cost further dropped to 5%, and the coupon rate of the latest private equity bond was 4.35%. The financing advantage continued to be highlighted.

Settle or slow down from a high base, with a target price of 5.70 yuan, downgraded to "overweight" rating.

The focus of the company's real estate sales returned to Shanghai, the average contract price increased significantly, and structural improvement led to a steady rise in gross profit margin. At the same time, the company increases the holding scale, relying on "China Enterprise Binjiang Seven" to build Lujiazui financial port, the medium-and long-term development of the leasing plate is worth looking forward to. In view of the high base in 2018 and the limited settlement resources on hand, we downgrade our forecast EPS for 2019-2021 to 0.44max 0.52 EPS 0.59 (originally 0.57max 0.65max 0.76). In view of the downward shift in the valuation center of the industry, we downgraded the 2019 PE to 13 times, with a target price of 5.70 yuan, to the "overweight" rating.

Risk hint: the construction progress of the rental plate is not as expected, and the push plate is not as likely as expected.