The epidemic affects the decline of performance and the improvement of operating cash flow.
What happened: on October 29th, the company released its three quarterly reports for 2020. During the reporting period, the company achieved total operating income of 56.734 billion yuan, down 11.8% from the same period last year; net profit from home was 7.28 billion yuan, down 25.3% from the same period last year; and basic earnings per share was 1.84 yuan, down 24.9% from the same period last year.
The results stabilized in the third quarter and the overall gross profit margin rose. The company's homing net profit in the third quarter narrowed from a half-year decline of 28.5% to a year-on-year decline of 3.8%, and the impact of the epidemic gradually weakened. During the reporting period, the company's overall gross profit margin rose 2.04 percentage points year-on-year to 42.44%, and the sales expense rate and management expense rate decreased by 0.06 percentage points and 0.75 percentage points respectively compared with the same period last year. However, the decline in performance is still significantly higher than the decline in income mainly due to: 1) the increase in financing scale and capital cost led to an increase in financial expense rate by 5.06 percentage points to 6.48%. 2) the proportion of minority shareholders' profit and loss in net profit increased by 8.1 percentage points to 9.6% compared with the same period last year. By the end of the reporting period, the company's contractual liabilities plus accounts received in advance totaled 120.202 billion yuan, down 11% from the same period last year, covering 1.8 times the real estate development income at the end of 2019.
The scale of sales decreased, while the proportion of sales in Beijing, Tianjin and Hebei increased. During the reporting period, the company achieved sales of 60.09 billion yuan, down 40.3% from the same period last year, and the sales area was 328.7 square meters, down 63.9% from the same period last year. The single-quarter sales were 157.7%, 257.9, 18.15 billion yuan respectively, compared with-48.4%, 23.1%, 49.7%, and the sales area were 70.5, 144.7, 112.5 million square meters, and-76.9%, 40.9%, 68.7%, respectively. Among them, the proportion of sales area of Beijing, Tianjin and Hebei increased to 41.9% compared with the same period last year; outside Beijing accounted for the highest proportion of Zhengzhou, Nanjing, Hangzhou and Wuhan, accounting for 17.9%, 11.5%, 8.5% and 8.5%, respectively. The proportion of Zhengzhou decreased significantly, while that of Wuhan increased significantly.
Actively replenish land and improve operating cash flow. The company's land expenditure in the first three quarters was 19.85 billion yuan, an increase of 14.4% over the same period last year, accounting for 33% of the current sales amount. The planned capacity building area increased by 110.6 square meters over the end of 2019. The overall net operating cash outflow of the company decreased by 14.5 billion yuan compared with the same period last year, of which the net cash outflow of Industrial Metro and related businesses decreased by 25.3 billion yuan, and the cash flow situation improved significantly. In the first three quarters, the company received 43.35 billion yuan in cash for selling goods and providing services, down 31.3 percent from the same period last year; cash inflows from operating activities totaled 44.873 billion yuan, down 22.6 percent from the same period last year; the total return rate of cash flow caliber increased to 74.7 percent, and the payback rate increased significantly.
Lower level of leverage. The company continues to optimize the asset-liability structure through platform equity cooperation. By the end of the reporting period, the company's asset-liability ratio was 82.1%, down 1.8 percentage points from the same period last year. The asset-liability ratio excluding accounts received in advance was 76.5%, down 0.7 percentage points from the same period last year; and the net debt ratio was 190.43%, down 12.4 percentage points from the same period last year.
Investment suggestion: we predict that the annual operating income of the company in 20-21-22 will be 1094, 1343, and 145.7 billion yuan respectively, a growth rate of 4%, 22.8% and 8.5%, respectively, and the net profit will be 158 / 15.7 billion yuan, with a growth rate of-2.2%, 10.4% and 0.6%, respectively. The dynamic PE in 2020 is 5.7x, maintaining the "buy" rating.
Risk hint: the settlement progress is not as expected. Industry and financing policies tightened more than expected. The impact of the epidemic exceeded expectations.