Event
The company released its mid-term results in 2022, with operating income of 29.72 billion yuan in the first half of the year, down 18.3% from the same period last year, and the core net profit of 1.82 billion yuan, down 45.6% from the same period last year.
Brief comment
Performance is under short-term pressure. The company's revenue and core net profit declined in the first half of the year. The decline in revenue was mainly due to a decline in the average settlement price of real estate development business, which was 12746 yuan per square meter in the first half of the year, down 20.2% from the same period last year. The main reasons why the growth rate of core net profit is lower than that of revenue growth is as follows: 1. Provision for inventory impairment. Of this total, the impairment of consolidated items was 380 million yuan, while that of non-consolidated items was about 320 million yuan, resulting in an 84.1% drop in investment income of joint ventures in the first half of the year compared with the same period last year. 2. Financial expenses increased by 64.6% over the same period last year.
Sales have continued to improve and land acquisition has shrunk. From January to July, the sales volume was 79.24 billion yuan, down 49.5% from the same period last year, 4.1% lower than that in January-June; the sales area was 528.1 million square meters, down 41.2% from the same period last year, and 6.8% lower than that in January-June. Sales in July totaled 16.1 billion yuan, up 19% from the previous month, continuing the trend of improvement in sales in June. The amount of land taken in the first half of the year was 6.6 billion yuan, accounting for 10.5% of the sales amount, down 29.1% from the same period last year. The six projects acquired are located in Beijing, Yiwu, Shanghai, Changsha, Ningbo and Qingdao, and continue to focus on core cities. Despite the shrinking acquisition of land, the company's land reserves are still abundant. By the end of the first half of the year, the company's total land reserve area was 4927 million square meters, which was 3.4 times of the sales area in 2021, of which the first and second lines accounted for 84%. The total salable value in the second half of the year exceeded 200 billion, and the push was stronger than that in the first half of the year, which is expected to ensure the continuous improvement of the company's sales.
Demonstration private enterprises that are still financially sound. The company is still a green housing enterprise under the three red line standards. as of the first half of the year, the withholding asset-liability ratio, net debt ratio and cash short-debt ratio were 67.7%, 78.5% and 1.62x, respectively. Financing channels remained open in the first half of the year, and a total of about 4.6 billion yuan of bonds were issued, including US $150 million bonds, 1 billion medium-term notes, HK $2.545 billion convertible bonds, and 500 million yuan of corporate bonds that created credit protection instruments for the first time. In 2022, the company has no maturing rigid bonds and has a financial safety pad. In addition, corporate financing costs also fell further, with financing costs of 4.9% in the first half of the year, down 0.1 percentage points from 2021. The company has become one of the six exemplary real estate private enterprises in China Bond Promotion Company to provide guarantee for the issuance of medium votes, and its financial stability is recognized by supervision.
Diversified business has maintained a good momentum of development. The income from holding commercial property has greatly increased, and the company achieved 660 million yuan in holding property income in the first half of the year, an increase of 69% over the same period last year. The occupancy rate of 14 stores in operation reached 92%. As one of the four major platforms of the Construction Group, by the end of the first half of the year, Xuhui Construction Management had accumulated 7.13 million square meters in the total construction area, with an estimated sales value of 44.8 billion yuan, and achieved full coverage and breakthrough in the business model. Property services maintained a better performance growth rate than that of the same industry. Xu Huiyong realized a net profit of 380 million yuan in the first half of the year, an increase of 33.4% over the same period last year. The rental housing business starts round A financing, and in the future Xuhui Yuanyu is expected to become the third listed company under the company's concentric circle strategy.
Downgrade the earnings forecast and keep the buy rating unchanged. We downgrade the company's profit forecast, and the core EPS from 2022 to 2024 is 0.56, 0.60, 0.65 respectively (the original forecast is 0.87, 0.95, 1.04). Keep the buy rating unchanged.
Risk analysis.
Sales and performance carry-over may not live up to expectations; real estate policy relaxation is not as expected.