Business performance in 2019 was worse than expected, but contract sales were better than expected: due to the slight decline in the company's conversion in 2019 compared with the same period last year, coupled with the decline in gross profit margin in 2018 due to the delivery of goods with high gross profit margin in 2018, the gross profit margin in 2019 was lower than the same period last year, accounting for a profit of about 4.3 billion yuan, a slight year-on-year decline of 0.4%, worse than we had expected. However, the company's contract sales in 2019 were 210 billion yuan, a year-on-year increase of 67.8%, which was higher than we had expected. The annual turnover rate in 2019 was 77.8%, a substantial improvement of 29.5 percentage points year-on-year.
Joint development with listed medium-sized housing enterprises: in 2019, the company added 2.73 million square meters of land, with an average land cost of 5349 yuan per square meter, with a total of 14.6 billion yuan, of which 5.04 billion yuan was for the people. From a local or face-to-face point of view, the right-to-equity ratio of the company's new projects in 2019 was 36%, which was significantly lower than before, mainly because the company was in a period of growing demand. Last year, the company believed that more than half of its 25 projects would not be listed, but would acquire land in the form of comprehensive development with long-term partners. The partners are all brand real estate enterprises and model real estate enterprises or the most popular local real estate partners (such as Asahi, Midea, Zhengzhen, Jindi, Zhongliang, Lego and Rongxin, etc.), which is believed to be beneficial to the future development of the company.
By the end of December 2019, the company's total land area was 5.02 million square meters (83% of which was in the Yangtze River Delta), and the total land equipment value was 70.3 billion yuan. The average land cost is 4460 yuan per square meter. By the end of December 2019, the company has sold unsold revenue of about 15 billion yuan, and about 60% of it is expected to end this year. Affected by COVID-19, the company sold about 3 billion yuan in contracts in the first quarter of this year. However, the sales value of the company this year has reached 43 billion yuan to the people. Calculated at a conservative removal rate of 60 percent, it is believed that contract sales will reach 25 billion yuan this year, an increase of about 20 percent over the same period last year.
Valuation and ranking: although the world is suffering from the COVID-19 epidemic, China has come out of the haze and released water around the world. It is believed that China's credit market will not be too strong, and real estate sales will still be popular. As the closing time of the company's contract sales is longer than expected, the gross profit margin is slightly lower than expected, and more projects are jointly developed through joint venture and financial enterprises, our companies reported full earnings per share in 2020 and 2021, respectively, 35.4% and 27.9%, respectively, but adjusted earnings per share in 2020 and 2021 are still expected to increase by 41.7% and 54.3% respectively compared with the same period last year. NAV is valued at HK $65.6 per share, which is equivalent to about HK $8.70 per share. As a result of the recent stock market shock, real estate stocks have also made a lot of high returns, so there is a discount of 20%, with a target of HK $7.0. this is equivalent to 8.7x and 5.6x 2020 and 2021, 1.3x and 1.1x 2020 and 2021, respectively.
It is suggested that: 1) the central government's real estate control efforts have been intensified; and 2) China's economic growth has been weaker than expected.