The deduction of non-performance is + 23.8%, and the number of newly signed contracts for capital construction is high. 2023H1 achieved an operating income of 37.47 billion yuan, + 11.2% year-on-year, and a net profit of 660 million yuan, + 5.6% compared with the same period last year. Realized deduction of non-return net profit of 710 million yuan, + 23.8% compared with the same period last year, mainly due to a non-recurrent loss of 172 million yuan more than the same period last year. In the first half of the year, the company signed a new contract of 74.81 billion yuan, + 10.6% compared with the same period last year, including 53.38 billion yuan for capital construction, + 25.4% for the same period last year, and 21.43 billion yuan for housing construction, accounting for-12.8%. The proportion of newly signed infrastructure reached 71.4%, a new high in recent years.
The profitability of the real estate business has declined and real estate sales have recovered significantly. 2023H1's real estate business achieved revenue of 3.61 billion yuan, + 52.2% year-on-year; subject to the pressure of the industry boom, the company's real estate business gross profit margin continued to decline, 2023H1 is only 9.5%, down 4.0pct from 2022. 2023H1 achieved a real estate sales area of 459000 square meters, with a sales amount of 4.42 billion yuan, which was + 63.1% and + 120.3% respectively compared with the same period last year, reaching the highest level in the same period since the epidemic. In the first half of the year, the company added 207.5 mu of land reserve, and by the end of the first half of the year, the company was holding 361.0 mu of land. The company is relatively cautious in taking land, but it still maintains a certain scale of land storage on hand.
The PPP project enters the operation period, and the financing cost decreases obviously. By the end of the first half of the year, the company's long-term receivables for PPP projects were 37.62 billion yuan, an increase of 4.81 billion yuan over the end of last year, and PPP assets during the construction period were 7 billion yuan, 2.05 billion yuan less than at the end of last year. The company's PPP project has been in operation since 2022, and the follow-up of the PPP project is expected to bring stable net cash inflows. Due to the high capital requirements of the PPP project, the scale of the company's interest-bearing liabilities expanded, but the financing cost continued to decline. 2023H1 paid 1.08 billion yuan in interest expenses, + 0.8% year-on-year, and the average financing cost was 4.1%, down 1.3pct from the previous year.
PPP investment to improve quality and efficiency, operating cash flow greatly improved. 2023H1 realized net operating cash flow of 1.69 billion yuan, realizing positive cash flow in the first half of the year for the first time in five years. The company's "occupied funds" in the first half of the year
The increase in scale decreased significantly, with a decrease of 2.9 billion yuan compared with the previous period, while a net decrease of 660 million yuan in inventory, a decrease of 1.82 billion yuan more than the previous period, corresponding to the improvement of cash flow brought about by the decrease in net outflow of PPP projects and the rapid repair of real estate sales.
Investment advice: downgrade earnings forecasts and maintain a "buy" rating. The company has ploughed Anhui area for a long time, the resource advantage in the province is strong, the collection platform is continuously optimized, and the gross profit margin of the project increases steadily. The company has concentrated its PPP assets into the operating period and is expected to continue to generate cash inflows and debt pressure is expected to continue to ease. It is predicted that the EPS of 2023max in 2024 is 1.06 yuan, corresponding to PE5.9/4.8X. In view of the fact that the non-recurring gains and losses in the first half of the year have a great impact on performance, the profit forecast for 2023 is lowered and the "buy" rating is maintained.
Risk tips: the risk of macroeconomic fluctuations; the risk of the decline of customers' ability to pay; the risk of intensified competition; financial capital and liquidity risk.