We recently visited the management of the company.
Development business is expected to speed up
The company has made positive progress in sales. In the first eight months, contract sales increased 3.4% to 77.67 billion yuan compared with the same period last year, accounting for 64.7% of the sales target. With an annual value of 220 billion, we think the company has a high probability of reaching the sales target. By the middle of 20 years, the company's total land storage has reached 5300 million square meters, and it is conservatively estimated that the total value of the goods exceeds 700 billion, which is equivalent to 5.8 times of the 20-year sales target, which belongs to a higher level of the industry. The proportion of Greater Bay area / Yangtze River Delta / Hainan accounted for 24.7%, 13.3% and 8.7% respectively. Taking into account more abundant land reserves compared to their peers and a more balanced layout compared to the past, we expect the company to achieve above-average sales growth in 2021. The company's diversified land acquisition channels are also worth paying attention to. 3.75 million square meters of land were added in the first half of the year. According to the acquisition method, bidding / industrial town / cooperation and mergers and acquisitions accounted for 44.2%, 40.9%, 14.9% respectively.
Rapid development of diversified business
The company's income from diversified businesses (property management, environmental protection, hotel, property investment and others) for the whole of 19 years / the first half of 20 years was + 66% and 74% respectively compared with the same period last year, and its contribution to total revenue reached 10% and 13% respectively. A-City, a subsidiary of Smart Home Decoration and Landscape Services, submitted A1 to the Hong Kong Stock Exchange in June. Yacheng Technology achieved revenue / gross profit / net profit of 5.09 billion / 1.3 billion / 820 million in 19 years, an increase of 45.1%, 59.6% and 67.8%, respectively, compared with the same period last year. The contribution of third parties to income increased from 8.9% in 18 years to 21.1% in 19 years. The successful case of the listing of Yashi (3319 HK) shows that the significance of the split lies not only in the release of value, but also in promoting the development of diversified business. If estimated according to the average income growth rate of the development and diversification business 19FY/1H20, the diversification business is expected to contribute nearly half of the income in five years' time, and the growth momentum is more balanced.
Significant improvement in interim performance
Total revenue in the first half of 2000 increased 24% to 33.52 billion compared with the same period last year; the company's gross profit margin reached 34.4%, up from 30.3% in the same period last year / the whole of last year; mainly due to the increase in the contribution of high-margin Hainan projects; the proportion of SG&A to income was 8.0%, down from 8.7% in the same period last year / last year; and the core net profit attributable to the same period last year increased by 32.9% to 5.306 billion The company declared an interim dividend of HK $0.50 per share, with a dividend distribution of about 34.1%. By mid-20, total debt had risen slightly by 2.3 per cent to 98.94 billion, cash-to-short debt rose to 1.15x from 1.0x at the end of 1919, and the net debt ratio fell to 73.3 per cent from 82.8 per cent at the end of last year. Since 18 years ago, Hainan provincial government has implemented purchase restrictions on the whole island, which has affected the rhythm of the company's sales and revenue recognition; in 19 years, Hainan has actively promoted the reform of household registration and the introduction of talents, and relaxed the policy of purchasing houses in Sanya in early October; with the implementation of the overall plan for the construction of Hainan's free trade port in June, Hainan's housing policy will tend to be stable, and we believe that the harshest days of Hainan's regulation and control have passed. With the support of the Hainan project, we expect the company to maintain a higher gross profit margin than the industry average.
Dividend yield is attractive, investors are advised to pay attention to it.
Benefiting from the improvement of key regional policies and the positive development of diversified business, the share price of YTD outperformed the Hang Seng China Real Estate Index by 5.72% in the past 20 years. Yesterday's closing price corresponds to the 10.27% annual dividend yield of 4.1x20 PE,0.65x and 20-year PB,20. Considering the relatively sound financial level, we think that the valuation is low and the dividend yield is attractive. We believe that the policy factors that suppress the development of the company have improved significantly, and there are still multiple benefits to be released in the future. Taking into account the fundamentals and valuation, we suggest that investors actively pay attention. Risk hints: (1) RMB exchange rate fluctuates sharply; (2) Policy tightening exceeds expectations