Comments on the mid-term report in 2023: 1) the decline in profit margin results in the increase of income but not profit in the current period. In the first half of 2023, the company achieved operating income of 36.856 billion yuan, an increase of 31.10% over the same period last year. The settlement area of the company's real estate project was 1.8162 million square meters, up 56.84% from the same period last year, and the settlement income was 31.142 billion yuan, up 33.94% from the same period last year. Affected by the downward market, the company realized a net profit of 1.532 billion yuan belonging to shareholders of listed companies, down 22.24% from the same period last year. In the first half of 2023, the company's real estate settlement gross profit margin was 14.87%.
2) stick to the bottom line of financial security. By the end of June 2023, the company's interest-bearing liabilities totaled 109.585 billion yuan, of which bank loans accounted for 70.84%, open market financing accounted for 28.98%, and other financing accounted for 0.18%. The weighted average cost of debt financing is 4.39%. The company's long-term liabilities account for 62.85% of all interest-bearing liabilities, and the debt maturity structure is reasonable. As of the mid-2023 report, of the company's interest-bearing liabilities, domestic liabilities accounted for 95.73% and foreign liabilities accounted for 4.27%. In 2023, the total capitalized interest expenditure of the company is 1.085 billion yuan, and the non-capitalized interest expenditure is about 1.696 billion yuan.
3) the sales amount decreased compared with the same period last year, and the high-quality soil reserves were replenished in an orderly manner. In 2023, 1H, the company achieved a total signed area of 4.711 million square meters, an increase of 12.4% over the same period last year; the cumulative amount of signed contracts reached 85.82 billion yuan, down 14.7% from the same period last year; and marketable resources are mainly distributed in strong first-and second-tier cities in East China, North China and South China. In 2023 1H, the new construction area of the company is about 1.79 million square meters, and the completed area is about 4.37 million square meters. The total investment of the newly acquired project is about 11.9 billion yuan, and the company's total land reserve is about 850000 square meters. The company highly focuses on high-level city investment, and the new acquisition projects are located in first-and second-tier cities.
4) the business of property management and agent construction has maintained good development. In terms of property services, Jindi Wisdom Service continues to consolidate the basic business and pay attention to the development of quality. By the end of the first half of 2023, the contract management area was about 368 million square meters, of which the management area was about 217 million square meters. In addition, Jindi agent construction business has been distributed in more than 50 cities across the country by 2023, with more than 160 management service projects and a total contracted management area of more than 22 million square meters, including residential contracted area of more than 14 million square meters, residential projects with a cumulative saleable value of more than 150 billion yuan, and non-residential contracted area of more than 8 million square meters.
Investment advice: maintain a "better than the market" rating. We estimate that the EPS of the company in 2023 is 1.38 yuan respectively, and give the company 7-8XPE valuation, corresponding to the reasonable value range of 9.66-11.04 yuan.
Risk tips: 1) sales and settlement are not as expected; 2) the industry is facing downside risks.