Core views
The company's sales and land acquisition scale are at the top of the industry. The contract sales amount of 124.7 billion yuan in the first half of the year ranked 4th in the industry, ranking the same as in 2023; thanks to the key layout in high-energy cities, recent policy optimization clearly boosted the company's sales. The sales volume in June was 32 billion yuan, up 19.0% year on year, and the growth rate ranked 3rd in the industry. In the first half of the year, the company ranked 3rd in the industry in terms of land acquisition amount of 23.88 billion yuan. In the first half of the year, the company achieved recurring business revenue of 22.78 billion yuan, an increase of 14.2% over the previous year. Among them, rental income from the operating real estate business was 14.15 billion yuan, an increase of 16.5% over the previous year. Since the beginning of 2024, 7 shopping malls have been opened one after another. The opening plans of 16 companies have progressed steadily throughout the year, and the scale of real estate operations has continued to grow.
occurrences
The company released operating data for the first half of 2024. In the first half of the year, the contract sales amount was 124.7 billion yuan, a year-on-year decrease of 26.7%; of these, in June, the company achieved a contract sales amount of 32 billion yuan, an increase of 19.0% over the previous year. In the first half of the year, the company achieved recurring business revenue of 22.78 billion yuan, an increase of 14.2% over the previous year, of which rental income from the operating real estate business was 14.15 billion yuan, an increase of 16.5% over the previous year.
Brief review
The scale of sales and land acquisition has steadily ranked first in the industry. The company's contract sales amount of 124.7 billion yuan in the first half of the year ranked 4th in the industry. The ranking was the same as in 2023, down 26.7% year on year, better than the overall 42% decline of the top 100 housing companies. Thanks to the key layout in high-energy cities, recent policy optimization clearly boosted the company's sales. In June, the company's contract sales amount was 32 billion yuan, up 19.0% year on year, ranking 3rd in the industry. Based on the marketing and investment approach, the company's land acquisition efforts declined in the first half of the year, and the absolute scale of land acquisition was still at the top of the industry. According to Kerry data, the amount of land acquired by the company in the first half of the year was 23.88 billion yuan, ranking 3rd in the industry in terms of scale. The land acquisition intensity was 19.1%, down from 55.9% in 2023.
Recurring business revenue has been growing steadily, and shopping malls have maintained a relatively fast pace of entry into the market. In the first half of the year, the company achieved recurring business revenue of 22.78 billion yuan, a year-on-year increase of 14.2%, and the steady growth of the recurring business performance strongly supported the company's overall operating performance; among them, rental income from the operating real estate business was 14.15 billion yuan, up 16.5% year on year. Since the beginning of 2024, the company's subsidiaries Handan Wanxianghui, Wuhan Wuchang Wanxiangcheng, Hefei Baohe Wanxianghui, Changzhou Wanxiang City, Changzhou Wanxiang City, Beijing Northwest Wangxianghui, Tongxiang Shopping Mall, and Guiyang Vientiane City have opened a total of 7 shopping centers. The opening plan is progressing steadily, and the scale of real estate operations continues to grow.
Keep profit forecasts and buying ratings unchanged. We predict that the company's EPS for 2024-2026 will be $4.59/4.95/5.57. The company's development business will remain at the top of the industry, and the recurring business will grow steadily, maintaining the purchase rating and target price of HK$47.6.
Risk analysis
1. Sales and carry-over fall short of expectations: On the sales side, there is still a risk that the market will continue to decline or fall short of expectations in the future. Although the company's land storage is concentrated in high-energy cities, it may also be affected by the downturn in the market and cause subsequent sales growth to slow down. Furthermore, the company's previous land acquisition price was high. If the settlement profit margin falls short of expectations, it will affect the company's performance.
2. Decline in housing prices: If housing prices continue to decline in current energy level cities, it will be difficult for the company to achieve sales targets. At the same time, it will cause asset impairment losses and affect performance.
3. Rental income falls short of expectations: Rental income is strongly correlated with macroeconomics and residents' income. If economic recovery falls short of expectations, it will affect the achievement of rent targets. At the same time, the decline in rent growth will affect the fair value assessment of the company's investment properties, which in turn will have an impact on financial statements.