Key points of investment

Greentown Management Holdings released its 2024 semi-annual report. The company achieved revenue of 1.67 billion yuan in the first half of 2024, +7.8% year-on-year, and net profit of 0.5 billion, or +5.8% year-on-year.

Performance continues to grow and profitability is stable

According to the 2024 semi-annual report, the company achieved revenue of 1.67 billion, +7.8% YoY, and net profit 0.5 billion, +5.8% YoY. The company's profit growth rate was slightly lower than profit, mainly due to the company's comprehensive gross margin of 51.5%, down 0.5 pct from 52.0% in the same period last year. In addition, the company's ROE was 13.35%, up 0.25pct from the same period last year. Overall, the company's profit level is relatively stable, maintaining the number one position in the development service field, and maintaining a market share of more than 20% in the contract construction industry for 8 consecutive years. We expect the company's profit scale to increase further in the future as the volume of new orders signed by the company continues to expand.

The project focuses on the core area, and the number of newly signed projects continues to grow

By the end of June 2024, the company had deployed 128 major cities, with a total contract area of 122.8 million square meters, +8.1% over the same period. The project mainly focused on core economic zones such as the Bohai Rim, Beijing-Tianjin-Hebei, Yangtze River Delta, Pearl River Delta, Chengdu and Chongqing, with a saleable value of 674.7 billion, accounting for 75.6% of the total value. The company actively focused on the core metropolitan area to lay the foundation for steady future development. In the first half of 2024, the total construction area of the company's new development project was 17.4 million square meters, +1.1% over the same period, of which the government, state-owned enterprises and financial institutions accounted for 70.5%. The company adapted to the industry situation, optimized the customer structure, and maintained the number one position in the industry for Xintuo's business.

Executives increase their holdings and show confidence

According to the announcement on August 30, the company's co-chairman Guo Jiafeng, Zhang Yadong, executive director and CEO Wang Junfeng, and many other directors and managers used personal funds to increase their total holdings of the company's shares by 15.452 million shares in the open market from August 26 to 30. Among them, Guo Jiafeng increased her holdings by 10 million shares, Zhang Yadong increased her holdings by 0.306 million shares, and Wang Junfeng increased her holdings by 1.2 million shares. The increase in the company's executive holdings will help increase investors' confidence in the future development of the company.

Investment advice: As a leader in the contract construction industry, Greentown Management Holdings is backed by Greentown Group. As an enterprise with the highest market share, Greentown Management Holdings has achieved steady performance growth in recent years. We expect the company's 2024-2026 net profit to be 1.246 billion, 1.557 billion, and 1.908 billion, respectively, corresponding PE of 5.0 times, 4.0 times, and 3.3 times, respectively, maintaining the “buy” rating.

Risk warning: The downturn in the real estate industry exceeds expectations, and the citation data is lagging or untimely.