Performance continues to be under pressure, and dividends have remained stable. In the first half of 2024, the company achieved operating income of 35.3 billion yuan, a year-on-year increase of 10.1%; net profit to mother of 1.8 billion yuan, a year-on-year decrease of 15.9%; and core net profit of 1.7 billion yuan, a year-on-year decrease of 18.8%. The reason why the company's revenue did not increase profit was due to the gross settlement margin of about 13.7%, a year-on-year decrease of 4.1 pct. The company's mid-term dividend was RMB 0.173 per share, accounting for about 40% of core net profit, and the dividend ratio remained stable.

Deeply involved in the Greater Bay Area and achieved a sales target of 37.7% in the first half of the year. In the first half of 2024, the company achieved a sales area of 1.88 million square meters, a year-on-year decrease of 24.0%; achieved a sales amount of 55.4 billion yuan, a year-on-year decrease of 33.8%, and achieved 37.7% of the annual sales target. Looking at the subregions, the company's sales in the Greater Bay Area, East China, Midwest China, and Northern regions accounted for 47%, 23%, 16%, and 14%, respectively. In the first half of 2024, the company added a total of 12 plots of land in Guangzhou, Beijing, Shanghai, Hangzhou, Hefei, Chengdu and other cities through the “6+1" diversified storage growth model, with a total construction area of about 1.72 million square meters. Of these, 88% were located in first-tier and key second-tier cities, accounting for 66% of the increase in reserves through diversified channels. By the end of the first half of 2024, the company's total land storage was 25.03 million square meters, of which the Greater Bay Area accounted for 41% and Guangzhou accounted for 37%; East China, Midwest China and North China together accounted for 59%, and the soil storage structure remained high quality.

The finances are stable and the financing channels are unobstructed. The company's financial level has always remained “green”. As of the end of the first half of 2024, the company's balance ratio after excluding advance payments was 68.3%, the net debt ratio was 58.6%, and the short-term cash debt ratio was 1.5. The company's financing channels were unobstructed. In the first half of the year, domestic RMB corporate bonds were issued totaling 1.5 billion yuan, 0.5 billion3+2 year coupon interest rate 2.25%; 1 billion 10-year coupon interest rate 2.75%; overseas RMB dim sum bonds were issued at 2.39 billion yuan, with a weighted average interest rate of 4.07%. The company's total average borrowing cost was 3.47%, a decrease of 35 bps.

Risk warning: The decline in industry fundamentals has exceeded expectations, and policy warming has fallen short of expectations.

Investment advice: Affected by the downturn in the market and the decline in gross margin, the company's performance in the first half of the year is expected to rise steadily as the company's high-margin projects continue to be settled. We maintain our previous profit forecast. We expect the company's net profit to be 3.2/3.3 billion yuan for 2024-25, with earnings per share of 0.79/0.82 yuan respectively, corresponding to the current stock price PE of 4.2/4.0, respectively, maintaining a “superior to the market” rating.