Core views Company ratings: In terms of foreign ratings, Moody's gave the company entity a B1 rating in 2019-04-09, with a stable rating outlook; S&P gave the company entity a B rating on 2019-04-12, with a positive rating outlook; Fitch gave the company entity a B+ rating on 2019-09-10, with a stable rating outlook. In terms of domestic ratings, China Chengxin International gave Zhengrong Real Estate Holdings an AAA rating on 2020-5-27, with a stable rating outlook; Dagong International gave Zhengrong Real Estate Holdings an AAA rating on 2020-05-28, with a stable rating outlook. The issuance of US dollar bonds sought diversified financing, and the weighted interest rate was lower than the same rating in the industry. The company issued $890 million in US dollar bonds in the first half of 2020, with an average interest rate of 7.57% and an average maturity of 3 years. The weighted average coupon interest rate for stock dollar bonds is 9.1%, and the weighted average coupon interest rate for housing enterprises with a B2 rating is 11.9%. The coupon interest rate is lower than the market level of the same rating. Sales targets are steadily increasing, and the distribution of land storage is becoming more and more balanced. Zhengrong Real Estate's contract sales amount and area in 2019 were 13.71 billion yuan and 8.439 million square meters respectively. The target sales amount for 2020 was 140 billion yuan, and 2020H1 achieved 40% of the annual sales target. In 2019, land storage focused on second-tier and third-tier cities. The distribution of urban agglomerations was relatively balanced, and equity land reserves reached 144.65 million square meters. In the first half of 2020, the ratio of land prices to housing prices was 38.4%, and the ratio of land acquisition amount to sales amount was 31.8%. Land acquisition efforts have begun to increase. At the same time, the land equity ratio is also steadily increasing. The performance guarantee factor is high, the share of three fees remains low, and cost control is relatively good. Performance guarantee factor 1.2 in 2019. Three fees account for 6.7% of revenue, and cost control is relatively good. The equity multiplier, asset turnover ratio, and inventory turnover ratio in 2019 were 5.4, 21.0%, and 30.8% respectively, which remained basically stable compared to last year. Based on the company's announced sales amounts for 2019 and the first half of 2020, cash flow pressure is estimated, and there is a margin of safety for short-term debt repayment. If we only consider repayment of the company's short-term debts through sales repayment, the sales coverage ratio for the same period this year from June to December 2019 is 2.0; if we consider land payment expenses further, after repayment of short-term debts, the remaining amount can support 1.07 times the amount of land acquisition in 2019. Sales payback covers debt and expenses to a high extent, and the use of funds is more flexible. Short-term solvency is stable, and the company is less affected by transactions between related parties and non-controlling shareholders. The company's short-term debt-to-cash ratio in 2019 was 1.42. The guarantee provided to joint ventures was 4.77 billion yuan, an increase of 29.3% over the previous year, accounting for 15.4% of owners' equity. The collateral asset payout ratio is 45.9%. The collateral ratios for inventory and investment properties were 61.3% and 46.0%, respectively. Amounts receivable from related parties and non-controlling shareholders of subsidiaries account for 7.3% of current liabilities. Payments payable to related parties and advances to non-controlling shareholders of subsidiaries account for 14.4% of current liabilities. Overall, there is a margin of safety in the company's ability to repay its debts. It is recommended to focus on the company's primary and secondary market performance. Risk warning: policy risk, financing risk, credit risk, risk of incomplete sales performance