The business performance is stable. 2021H1 increased its push efforts and volume, and the overall contracted sales area and amount were 2.26 million square meters and 44.7 billion respectively, an increase of 58 per cent and 41 per cent respectively over the same period last year. In terms of reporting results, 2021H1 achieved operating income of 23.014 billion yuan, an increase of 34.41% over the same period last year, and net profit of 2.366 billion yuan, up 15.09% over the same period last year, with basic earnings per share of 0.20 yuan. The gross profit margin of integrated tourism business and real estate business was 24.76% and 73.12% respectively, down 12.9 and 7.59 percentage points from the same period last year, mainly due to the gradual decline of gross profit margin of saleable properties in newly developed projects and the different proportion of carry-over structure and carry-over area.

The three main businesses are working together. 1) Cultural tourism business: by the end of 2021H1, the revenue of the integrated tourism business was 18.922 billion yuan, an increase of 89.93% over the same period last year; a total of 28.482 million tourists were received, which recovered to 84% of the same period in 2019 according to a comparable caliber, and the recovery was better than the industry average. This is mainly due to the addition of six cultural tourism projects such as the Mayan Beach Water Park in Xi'an Happy Valley in 2019 compared with the same period in 2019. 2) Real estate business: the project promotion, sales and rebate of 2021H1 Company have all achieved substantial growth over the same period last year, with a total of 14 land projects, with an additional land area of 1.94 million square meters, as well as corresponding resources in Zhaoqing, Zhengzhou, Hefei and other places to ensure that the company will continue its ploughing in related areas. Through the combination of internal and external strength to achieve complementary advantages and improve efficiency, the Central Division and Minmetals Capital, East China Division and head enterprises and other partners have respectively created and developed Wuhan Happy Skyline Central area, Suzhou Project and so on. 3) property management services: the company's property is actively expanding its development territory, with 2021H1 adding 1.04 million square meters of construction area and 360000 square meters of reserve management area. At present, the overall management project covers an area of more than 200square kilometers, and the construction area is nearly 20 million square meters. There are a total of 69 subsidiaries and subsidiaries throughout the country, covering 66 cities, initially completing the layout of development throughout the country.

The finance is sound and the financing cost is low. 2021H1's total interest-bearing liabilities are 138.066 billion yuan, 3.392 billion less than at the beginning of the year, its assets and liabilities and its long-term and short-term share structure are stable, the three red lines are stable and continue to maintain the green level; at the same time, it insists on the matching speed of de-chemical and high-quality project expansion, and keeps the operating net cash flow healthy. 2021H1 is actively expanding financing channels, with an average financing cost of 4.38%, which is at a lower level in the same industry; its overseas Chinese Town in Hong Kong cooperates with the landing of projects in the northern, eastern, western and central sectors to help solve the capital needs of various divisions; the company has 11 funds that participate in the management or contribution, with a total size of more than 6.925 billion yuan, giving full play to the function of industrial funds to pry social capital and help the development of the main industry.

Investment advice: "better than the big market". The company's finance remains sound and the financing cost advantage is obvious. We estimate that the company's EPS in 2021 will be 1.71 yuan, and give the company a valuation of 4-5 times PE in 2021, with a corresponding reasonable market value of 562-70.2 billion yuan, a corresponding reasonable value range of 6.85-8.56 yuan per share, and a corresponding PEG of 0.38-0.47 in 2021.

Risk Tip: the downside risk of the company carrying forward gross profit.