Core views
Real estate business: The satellite city around the capital is deeply cultivated, and land storage will provide support for future performance. (1) Sales grew steadily in 2019, and the completed area reached a peak. Sales increased 26.5% year over year to 770 million yuan. The housing project has a new construction area of 320,000 square meters and a completed area of 426,000 square meters. (2) Land storage provides support for future performance, mainly in Zhuozhou and Zhangjiakou. The total land reserve floor area is about 1,607 million square meters, and the ratio of land reserve to carry-over area is 9.0. (3) The company currently has an unsold value of 10.25 billion dollars, and the unsold value/sales amount has reached 13.3 times. Land prices and housing prices for the company's projects are relatively low, providing strong support for future profit margins.
Construction business: There are plenty of new contract orders, and we are actively moving forward with Beijing-Tianjin-Hebei. (1) New contract orders for building construction projects are sufficient to guarantee future performance. New contract orders for industrial, commercial and infrastructure construction and building construction projects increased 16.0% and 98.8% year-on-year, respectively, to reach 680 million and 2.75 billion. (2) The construction business has expanded to 15 provinces across the country, and there are still a large number of uncompleted contracts. Unfinished contracts for industrial, commercial and infrastructure construction and building construction projects increased 37.0% and 137.2% year-on-year, respectively, to reach 550 million and 3.10 billion.
Other regions increased their share of uncompleted contracts from 2.2% to 37.2%.
Profit: The main profit indicators have improved, real estate growth is high, and construction is relatively stable. (1) Revenue and net profit returned to the mother increased rapidly in 2019. The company's revenue scale in 2019 reached 2.66 billion yuan, and the three-year CAGR was 48.7%; the net profit of the parent company reached 320 million, and the three-year CAGR was 131.2%. (2) Real estate business revenue growth was high.
The real estate development business achieved revenue of 1.29 billion yuan, an increase of 223.4% over the previous year. (3) The construction contracting business maintained steady development and actively expanded construction business outside of Beijing-Tianjin-Hebei Province. The construction contracting business achieved revenue of 1.37 billion yuan, an increase of 13.7% over the previous year. The non-Beijing-Tianjin-Hebei construction sector increased from 7.1% in 2018 to 31.9% in 2019.
Debt: The net asset liability ratio is low, and solvency is improving. (1) The balance ratio of China Tianbao Group after deducting contract liabilities is at an average level in the industry. The balance ratio in 2019 was 82.2%, and the balance ratio after deducting contract liabilities was 75.9%. The net balance ratio is 43.0%, and the net balance ratio (excluding restricted funds) is 31.0%.
(2) One-year bank loans accounted for a relatively large share, accounting for 78.5%. The share of mortgages in the construction industry reached 24.4%, while property, plant, equipment and investment properties accounted for 31.1% and 59.5% respectively. (3) The financing cost is 4.94, which is low in the industry. (4) The company is not greatly affected by related party transactions.
In summary, we believe that the solvency of China Tianbao Group has a safe margin of security, which is worth paying attention to.
Risk warning: policy risk, financing risk, credit risk, risk of incomplete sales performance
