The net profit of home ownership in the first three quarters is + 75.1% compared with the same period last year. On October 29, the company disclosed the third quarter report of 2020, with revenue of 8.03 billion in the first three quarters, + 74.8% last year, and net profit of 290 million, + 75.1% in the same period last year. Net investment income in the reporting period supports performance. Taking into account the substantial increase in financial expenses in 2020-2022, we adjust the EPS to 0.82,1.08,1.41 yuan (the previous value is 1.12,1.41,1.77 yuan). We believe that the company's sales and land acquisition are expected to maintain high growth expectations and maintain a "buy" rating.
High sales growth continues to be realized, and investment income supports performance.
The company's high sales growth continued to be carried forward, with revenue in the first three quarters year-on-year of + 74.8% and settlement gross profit margin of + 1.5pct to 24.8%. Although the substantial increase in borrowing expenses and the rapid business expansion pushed up the cost rate from + 4.0pct to 12.1% compared with the same period last year, and the centralized settlement of low equity ratio projects resulted in minority shareholders' profit and loss from + 156.9% to 500 million, the net investment income in the reporting period was as high as 320 million (mainly due to Kunming Zhongjiaojinsheng property control and table confirmation of the investment income of about 290 million). Support the high-speed growth of 75.1% of the return net profit. At the end of the reporting period, there were 18.61 billion outstanding sales in the company's table, which was + 8.4% compared with the same period last year.
Sales and land acquisition comprehensively catch up with the whole year of 1919, and annual sales are expected to break through the 40 billion mark. In the first three quarters of the year, the company is expected to achieve full-caliber sales of 30.06 billion, year-on-year + 71.2%, and equity sales of 19.68 billion, + 74.8% of the same period last year, surpassing 29.39 billion and 19.23 billion of 2019 respectively.
The average sales price in the first three quarters was 21,000 yuan / ping, up from 16,000 yuan / ping in 2019, and the high-level layout strategy continued to show. The total price of land reserves increased by 46.05 billion in the first three quarters, close to the sum of the land held in 2015-2019 (47.3 billion); the land price of land storage rights and interests increased by 22.79 billion, also exceeding 11.8 billion of the whole year of 2019; the investment intensity (amount of land / sales) was 153.2%, which was + 91.4 7.1pct compared to the whole year of 2019; and the real estate ratio (average land price / sales price) was 43.6%, which was higher than that of 2019-2019.
The sales value of the company is abundant, and we think the company's annual sales are expected to break through the 40 billion mark.
Fully grasp the opportunity of leverage expansion and lay the foundation for leapfrog development
At the end of the reporting period, the asset-liability ratio of the company deducting accounts received in advance was 84.7%, and the net debt ratio was 227.9%, which was + 2.2pct and + 143.0pct, respectively, compared with the end of 2019; the cash short-debt ratio was 154.1%, which was 49.8 billion yuan compared with the end of 2019-22.4pct at the end of September, an increase of 133% compared with the end of 2019. The company actively gives full play to the financing advantages given by the background of central enterprises and group support, and fully seize the opportunity of leverage expansion before the full implementation of the new financing rules, so as to lay a resource foundation for further leapfrog development in the future.
Small stature and big dream, maintain "buy" rating
The company is the only A-share real estate platform under China Communications Construction Group, and the Group promises to gradually start the deep integration of its housing-related enterprises with the company before the end of 2021. Considering the substantial increase in financial expenses in the past 20 years, we adjust the EPS to 0.82,1.08,1.41 yuan (the previous value is 1.12,1.41,1.77 yuan) in 2020-2022, and refer to the comparable company's average PE valuation of 5.0 times in 2021 (Wind consensus expectation). Taking into account the high growth expectations of sales and land acquisition, we think that the company's reasonable PE valuation in 2021 is 7.50 times, and the target price is 8.10 yuan (the previous value is 10.58 yuan). Maintain a "buy" rating.
Risk tips: epidemic development uncertainty, industry policy risk, industry downside risk, business risk.
