1) Real estate created a second growth curve, and revenue was still bright against the trend. 2024H1 achieved revenue of 79.13 billion yuan, up 8.4% year over year. Among them, the turnover of the development and sales business was 59.13 billion yuan, up 8.3% year on year; the total turnover of recurring revenue was 20 billion yuan, up 9.0% year on year, accounting for 25.3%. In terms of operational real estate business, the company has already become a leader in domestic commercial operations. Investment properties represented by the “Vientiane” shopping center have contributed new momentum to the company's performance growth. They can not only strongly support the main business to obtain resources to generate synergetic benefits, but also contribute long-term stable cash flow through independent profits. At the same time, it is also a reflection of the company's valuation differentiation; shopping centers/offices/hotels in 2024H1 operating real estate achieved rental income of 9.5/0.95/1.04 billion; of these, 6 shopping malls opened as scheduled in the first half of the year, and their subsidiaries are in operation The number of shopping malls has reached 82, achieving both retail sales (+21.9% to 91.6 billion yuan) and occupancy rate (+0.8pct to 97.3% compared to the end of the year).
2) The gross margin of development is under pressure, and the core net profit is stable. The company's comprehensive gross profit margin in the first half of the year was 22.3%; among them, the gross margin of the development business was 4.6bp to 12.4% year-on-year, and the gross margin of the real estate business was +0.2 bps year-on-year, reaching 71.5%. The company's return to mother and core net profit were 10.3 billion yuan (-25.4% year over year) and 10.7 billion yuan (-4.7% year over year), respectively. It is worth noting that the company's recurring revenue continued to increase as a share of core net profit, with a year-on-year increase of 8.6pct to 51.4% (5.5 billion yuan).
3) The sales ranking is at the top, and we adhere to a high-quality investment strategy. 2024H1 achieved a contract amount of 124.7 billion yuan (ranking fourth in the industry), a year-on-year decrease of 26.7%, which is lower than that of the top 100 real estate companies (-39.5%); achieved a contract area of 5.21 million square meters, a year-on-year decline of 25.7%, of which it ranked in the top 5 in market share in 20 cities; and an outstanding turnover of 321.45 billion yuan in terms of market share at the end of the period. The company's revenue in the first half of the year was 25.6 billion yuan, focusing on the core area of the core city to acquire 11 projects (87% of first-tier and second-tier investments), corresponding to 20.5% of the land acquisition intensity. The company's total land storage area during the same period was 56.99 million square meters (development soil storage accounts for 83.7%, and line 1 and 2 accounts for more than 70%), covering 5.5X of the current sales area.
4) Steady financial management, maintaining an advantage in financing costs. As of 2024H1, the company's total interest-bearing debt ratio was 38.9%, cash reserves increased by 3.5% to 118.3 billion yuan, net interest-bearing debt ratio of 33.6%, and the three red line indicators remained green. Benefiting from the central enterprise background and its own steady financial situation, the company's 2024H1 financing cost was only 3.24%, down 32 bps from the end of 2023, maintaining the lowest level in the industry.
5) Double REITs help build a large asset management operation platform. The company has completed the initial construction of a long-term rental apartment+commercial dual REITs platform, providing an independent fund-raising platform for the company's diversified expansion, and also laying a solid foundation for the transformation to a large asset management business. As of 2024H1, the company's asset management scale reached 449.1 billion yuan. In the future, asset “management” value may be continuously released through the REITs platform.
Investment advice: Based on the industry's downturn cycle, we adjusted the profit forecast. The estimated revenue for 2024/2025/2026 is 263.16/277.31/286.29 billion yuan; net profit to mother is 26.55/25.35/25.65 billion yuan; the corresponding EPS is 3.72/3.55/3.60 yuan/share; and the corresponding PE is 5.2/5.5/5.4 times.
Risk warning: Policy relaxation falls short of expectations, the scale of land acquisition falls short of expectations, and there is a risk that industry fundamentals will decline.