The size of the commercial property portfolio continued to expand, and the contract sales amount increased dramatically. Maintaining the “buy” rating, Lujiazui published the 2024 mid-year report. The company achieved operating income of 4.598 billion yuan in the first half of the year, an increase of 15.5% over the previous year; achieved net profit of 0.556 billion yuan, a year-on-year decrease of 21.2%; and basic earnings per share of 0.12 yuan. Affected by the downturn in real estate sales and the market, we lowered the company's 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 1.26, 1.43, 1.62 billion yuan (the original value is 2.14 and 2.5 billion yuan in 2024-2025), corresponding EPS is 0.26, 0.30, 0.34 yuan, and the corresponding PE is 29.6, 26.0, 23.0 times. The company holds excellent property locations and saleable residential resources Sufficient, future performance growth can be expected, and the “buy” rating is maintained.
Office rental revenue declined, and commercial and hotel property revenue increased slightly in the first half of 2024. The company's leasing inflow was 1.676 billion yuan in the first half of 2024, a decrease of 10% over the previous year. By the end of the first half of the year, the company held 2.05 million square meters of commercial grade A office space, an increase of 0.139 million square meters over the previous year; it held a total area of 0.327 million square meters of high-quality R&D buildings, the same as the previous year. The total rental income from long-term operating properties outside the scope of the consolidated statement was 0.645 billion yuan, of which the new national expo contributed 0.36 billion yuan in rental revenue, an increase of 35.3% over the previous year. By the end of the first half of the year, the total floor area of the company's commercial properties was 0.606 million square meters, an increase of 0.137 million square meters over the previous year. The leasing inflow in the first half of the year was 0.22 billion yuan, an increase of 2% over the previous year. The company's hotel properties performed well in the first half of the year. The occupancy rate reached 73%, an increase of 8 pct over the previous year. The RevPar was 645 yuan, an increase of 103 yuan over the previous year.
Significant increase in contract sales amount
In the first half of 2024, the company achieved a total inflow of 4.308 billion yuan in real estate sales contracts, an increase of 583% over the previous year; achieved real estate sales settlement revenue of 1.235 billion yuan. The contract revenue mainly comes from: (1) Cash inflow of 2.702 billion yuan from residential property sales, mainly for: Century Qiantan Tianyu, Century Qiantan Tianhui, and Chuansha Jinxiu Yunlan projects. In the first half of 2024, the residential property contract sales area was 0.0209 million square meters, up 21% year on year; the contract sales amount was 2.257 billion yuan, up 104% year on year; the overall removal rate of the projects under sale was 84%. The cash inflow from commercial property sales was 1.606 billion yuan, in Fuhui Building B and C.
Risk warning: Increased competition for office leasing, risk of fluctuating housing prices in Shanghai, risk of litigation in Suzhou.