Core ideas:

The operating income of Hongyang Real Estate in the first half of 2020 was 9.624 billion yuan, a sharp increase of 146.3% over the same period last year. Compared with the same period in 2019, the average sales price and sales amount of Hongyang Real Estate have gone up. While ploughing Jiangsu, the company is also actively expanding the market of Chengdu-Chongqing, Pearl River Delta and other core metropolitan areas, and the national layout has begun to take shape.

I. double increases in operating income and net profit

In the first half of 2020, Hongyang Real Estate achieved operating income of 9.624 billion yuan, an increase of 146.3% over the same period in 2019. Of this total, income from property sales increased by 153.8% to 9.398 billion yuan over the same period in 2019, mainly due to a relatively low base in 2019 and a large amount of transfers by 2020. Commercial property development and operation business and hotel business recorded income of 213 million yuan and 12 million yuan respectively, accounting for a small proportion of the total business income. In the first half of 2020, the company's gross margin was 25.3%. The net profit was 900 million yuan, an increase of 23.5% over the same period last year.

Second, sales performance has risen against the trend, and the ability to resist risks has been improved. despite the impact of the COVID-19 epidemic, Hongyang Real Estate achieved sales of 31.6 billion yuan in the first half of 2020, an increase of 4.4% over the same period last year. At the same time, the company's signing and repayment rate is 91%, which is at a high level in the industry. From the perspective of regional distribution, the company's sales source is mainly in the Yangtze River Delta, which accounts for 77% of the total sales. From the perspective of energy level, the company's sales are mainly in core second-tier cities and new first-tier cities, with contract sales in new first-tier and second-tier cities accounting for 86%.

Compared with the same period in 2019, the company has a wider sales area in the first half of 2020. The project is mainly distributed in 35 cities, 15 more than 20 cities in the same period in 2019. The proportion of sales in the top five cities with sales contribution decreased from 74.72% to 46%. The company's dependence on the top five cities has decreased, and its anti-risk ability has been enhanced. Compared with the same period in 2019, the company has entered several core second-tier cities, including Zhengzhou and Changsha, and the urban energy level has been continuously improved.

In addition, benefiting from the rise in house prices in the company's layout area and the continued optimization of the product structure, the average contract sales price rose 13.6% to 14642 yuan / square meter. Among the top five cities where the company's sales contributed in the first half of 2020, the average sales prices in Nantong and Nanjing were 17219 yuan / square meter and 19878 yuan / square meter respectively, up 37.97% and 21.44% respectively compared with the same period in 2019, driving up the average sales price.

By the end of July, the company had achieved a sales performance of 40.804 billion yuan and the completion rate of the annual sales target had reached 54.45%.

Considering that the company has a reserve of 87.8 billion of the salable value in the second half of the year, and the economic fundamentals of the cities in the area where the company is located are good, and there is little pressure to eliminate, the company is expected to achieve the annual performance target.

Third, ploughing Jiangsu deeply and laying out the whole country

In the first half of 2020, Hongyang Real Estate acquired 21 pieces of land with a capacity area of 3.07 million square meters according to the strategic layout of "making Jiangsu bigger and ploughing the metropolitan area". Among them, Jiangsu, the stronghold, is the key area of the company's layout, and more than half of the new soil storage projects are located in Jiangsu. After Suqian acquired the land reserve in Huaian, Hongyang Real Estate has entered 12 of the 13 cities in Jiangsu, basically completing the layout of the whole province of Jiangsu. In addition, the company is also active in the layout of the country, the company has won 10 cases of land in Changsha, Chengdu and Foshan. By the end of June 2020, the company has entered most of the core metropolitan areas and initially completed the national layout.

As of June 30, 2020, the company has a land reserve of 18.37 million square meters, an increase of 8.5% over the end of 2019. The company's land reserve can be used for the company's development in the next 2-3 years, and the land reserve is relatively abundant. From the overall distribution of land reserves, the company's land reserves are mainly distributed in Jiangsu Province, where the land reserves account for 55% of the total land reserves, and most of the rest are distributed in the core metropolitan areas such as Chengdu, Chongqing and the Pearl River Delta. The national layout has begun to take shape. From the perspective of urban energy level, the company's land reserve in the new first and second line accounts for 76% of the total land reserve, the urban energy level is relatively high, the urban economic fundamentals are relatively good, and there is little risk of degeneration in the future.

Fourth, the scale of assets is constantly expanding and there is no pressure for short-term debt service.

With the continuous improvement of the company's income, the asset scale of Hongyang Real Estate is also on the rise. By the end of June 2020, the company's total assets had reached 101.696 billion yuan, breaking through the 100 billion mark for the first time, an increase of 6.6% over the end of 2019. While expanding the scale of assets, the company also attaches great importance to the liquidity of the company and the safety of the debt structure, and adheres to the path of development with financial constraints.

As of the end of June 2020, the company's net debt ratio in terms of financial leverage was 69%, roughly the same as at the end of 2019 and at a low level in the industry. In terms of short-term solvency, the cash-to-short-debt ratio was 1.54 times, an increase of 18 percentage points compared with the end of 2019, mainly due to a sharp increase in monetary funds and little pressure on short-term debt repayment.

In terms of debt structure, loans due within one year accounted for 36.8% of total loans by the end of June 2020, down 5.2 percentage points from the end of 2019. The proportion of loans due in 2-5 years rose to 41.9%, up 16 percentage points from the end of 2019, and the company's debt structure has been optimized.