occurrences

On August 30, 2024, the company released its 2024 semi-annual report. The first half of the year achieved operating income of 51.273 billion yuan, -0.33%; realized net profit to mother 1.417 billion yuan, or -34.17% year on year; net profit after deduction was 1.399 billion yuan, +0.45% year over year.

Non-profit deductions are steady, and investment returns are reduced

With 2024H1, the company achieved operating income of 51.273 billion yuan, -0.33% YoY; realized net profit to mother 1.417 billion yuan, or -34.17% YoY. Net profit to mother declined sharply. The main reasons were: 1) the gross margin of carry-over projects fell year-on-year in the first half of the year; 2) 2023H1, BOSHI Shekou Industrial Park REIT purchased the company's Guangming Science Park assets, bringing in equity investment income of 0.807 billion yuan; and 2024H1 had no equity investment income. With 2024H1, the company achieved net profit of 1.399 billion yuan after deduction, +0.45% over the same period last year.

Sales are at the top, focusing on core cities

2024H1, the company's sales scale is the top five in the industry, achieving a sales volume of 100.952 billion yuan, a year-on-year decrease of 39.3%, and a sales area of 4.3871 million square meters, a year-on-year decrease of 35.9%. The company focuses on high-energy cities, and the sales contribution of Qiangxin 30 cities reached 91%, ranking first in sales in cities such as Shenzhen, Xi'an, and Changsha. In terms of land acquisition, the company insisted on fixed investment. In the first half of the year, 7 parcels of land were added, with a total construction area of 0.8013 million square meters, a total land price of 14.614 billion yuan, and a land acquisition intensity of 14.5%. The equity acquisition amount was 9.997 billion yuan, accounting for 68.4% of the equity.

The three red lines remain green, and financing costs continue to be optimized

The company's finances are stable. The balance ratio excluding advance payments in the first half of the year was 62.42%, the net debt ratio was 59.17%, and the short-term cash debt ratio was 1.63. All three red lines remained “green”. The company's financing costs continued to be optimized. As of 2024H1, the company's comprehensive financing cost was 3.25%, down 22BP from the beginning of the year.

Profit Forecasts, Valuations, and Ratings

The company's revenue for 2024-2026 is estimated to be 192.016/212.071/229.43 billion yuan, respectively, +9.72%/+10.44%/+8.19% year-on-year; net profit to mother is 7.716/9.121/10.14 billion yuan, respectively, +22.10%/+18.21%/+11.17% year-on-year respectively. EPS was 0.85/1.01/1.12 yuan/share, respectively, and the 3-year CAGR was 1 7.1%. The company adheres to the city-focused strategy, smooth financing, steady operation, and maintains a “buy” rating.

Risk warning: Policy implementation falls short of expectations; market repair falls short of expectations; market competition intensifies.