In 2019, the company achieved revenue of 13 billion yuan, a slight decrease of 2.5%, net profit of 740 million yuan, an increase of 35.0% over the previous year, net profit after deducting 746 million yuan, an increase of 46% over the previous year, a significant improvement over the full year of 2018. 2) The gross margin and three-fee ratio declined, and the net interest rate increased: In 2019, the gross margin level fell by 5.4 PCT to 27.1%, mainly due to the decline in gross profit for projects such as Capital No. 9 and China Joint Famous City; the company's net interest rate improved, up 1.95 PCT to 7.65% over 2018, and the three-fee ratio fell to 11.5% from 12.8% in 2018, mainly a decrease of 1.7 pct in financial expenses.

The size of interest-bearing debt reached a record low, and the net debt ratio fell sharply for three years: 1) The scale of interest-bearing debt reached a record low, with a debt of only 1 billion yuan within one year: the company had good operating cash in 2019, net repayment of 7.9 billion yuan of debt. At the end of 2019, the company's interest-bearing debt fell sharply to 8.88 billion yuan, and by the first quarter of 2020, the company's cash on hand, and only 1.08 billion yuan in liabilities in one year; 2) The net debt ratio dropped sharply for three years: the company's debt ratio fell to 6.3 PCT to 66.0%, and the net debt ratio fell to 43.1%. 35.5%, compared to 113.7% in 2018 and 165% in 2017, a sharp drop for three consecutive years. Judging from the short-term debt repayment situation, the short-term cash debt ratio reached 1.2 times in 2019, and the solvency continued to improve.

Real estate sales have reached another level, sales repayment has been strengthened, and operating cash flow continues to be positive: 1) 2019 sales increased sharply by 31%, 2020 is expected to break 20 billion yuan: in 2019, the company achieved a contract amount of 18.9 billion yuan, an increase of 31.6% over the previous year, and an average sales price increase of 73.7% to 18,300 yuan/square meter. It mainly benefits from the company's vigorous development of the Yangtze River Delta integrated urban agglomeration project with Shanghai as the core. By region, East China, Southeast China, and Northwest China account for 32.1%, 39.1%, and 28.8% respectively, and sales regions are more diversified It has also effectively increased the overall average sales price. We expect the company's saleable value to exceed 30 billion dollars in 2020, and the sales amount is expected to exceed 21 billion dollars. 2) Strengthen sales repayment and continue to set a record: The company is committed to speeding up the return of sales payments. The repayment rate in 2019 reached 85%. The net cash flow from the company's operating activities has continued to be positive since 2017, which is conducive to ensuring the company's healthy development. Operating cash flow exceeded 10 billion dollars in 2019, setting a record. The revenue coverage rate of the company's advance accounts reached 0.74 times in 2019, a significant increase over 2018, laying the foundation for 2020 results.

The value of land storage has exceeded 100 billion yuan, and the Yangtze River Delta is deeply cultivated, and the layout potential of Shenzhen and the Greater Bay Area can be expected: 1) Land storage has exceeded 100 billion yuan: the company has sufficient land reserves. As of 2019, the company's total land reserves exceed 7 million square meters (land storage is expected to be 3.19 million square meters plus 2,679 million square meters, and 1,253 million square meters already promoted and unsold). The average sales price of the company is about 14,400 yuan/square meter. The total value of goods is 102.6 billion yuan, which can meet the next 2-3 years of development. 2) Deeply cultivate Fuzhou and the Yangtze River Delta: In the early days, Fuzhou, Lanzhou, and Shanghai were the main expansion cities, adhering to the development strategy of “deeply cultivating the Yangtze River Delta, consolidating the Greater Fujian, building on the Greater Bay Area, and expanding the Greater West”, and continued to cultivate Fuzhou and the Yangtze River Delta. 3) The layout potential of Shenzhen and the Greater Bay Area can be expected:

The company actively lays out the “three old” renovation projects in Shenzhen, which may become a new growth point for the company, and its potential is promising.

Investment suggestions: The company's profit, debt service, and cash improved across the board in 2019, interest-bearing debt reached a record low. The net debt ratio dropped sharply for three consecutive years. The value of goods exceeded 100 billion dollars. It actively entered Shenzhen and the Greater Bay Area on the basis of deep cultivation in Fuzhou and the Yangtze River Delta, or ushered in new growth points. The company's sufficient cash on hand provided a foundation for investment and growth in 2020, and employee holdings showed confidence. We expect the company's net profit in 2020-2022 to be 1.01 billion, 1.43 billion, 1.9 billion dollars, corresponding to EPS per share of 0.41 billion, 0.58 and 0.77 billion, corresponding to current stock prices PE is 19.4X, 13.7X, and 10.3X. For the first time, it covered the “buy” rating and gave the company a target price of 11.48 yuan/share.

Risk warning: macro-control risk, risk of performance growth falling short of expectations, risk of project removal falling short of expectations