(1) The company's 24H1 performance turned into losses, mainly hampered by the development business; (2) in the development business, 24H1 sales declined by about 40%, with cash flow safety as the core, suspending the pace of land acquisition; (3) in terms of operating business, the revenue scale of the property management, long-term rental and commercial sectors continued to grow positively; (4) at the debt level, it actively responded to open bond payments through asset transactions and collateral. The 24E/25E/26E EPS is expected to be -0.74/-0.13/0.21 yuan/share (-172%/-82%/-259% year-on-year, respectively), and the PE corresponding to the current stock price is -8.6/-49.2/30.9, respectively. Taking into account the fact that the company's sales are still facing downward pressure and the company has actively disposed of and collateralized assets to cope with public debt payments up to now, maintain the “plus” rating.

The results turned into losses in the first half of '24, which was mainly hampered by the development business. The company's 24H1 achieved operating revenue/operating profit/ net profit attributable to mother of 142.8 billion yuan/-7.7 billion yuan/-9.9 billion yuan, respectively; (1) The year-on-year decline in operating income was mainly driven by a decline in the settlement scale of development businesses. Overall, revenue from non-development businesses maintained single-digit growth. Structurally, the development business achieved settlement revenue of 111.7 billion yuan (-35% year-on-year), and the non-development business achieved revenue of 31.1 billion yuan billion yuan (+3% YoY), non-development businesses accounted for about 28% of revenue; (2) The year-on-year growth rate of operating profit was significantly lower than the revenue growth rate, mainly due to a decline in gross margin, an increase in management expenses and financial expenses, and an increase in asset impairment losses. Specifically, the overall gross margin decreased by 10.8 pct to 8.1%, of which the gross margin of the development business decreased by 13.5 pct to 6.8%, and the gross margin of the non-development business increased by 1.5 pct to 12.2%; the sales expense ratio increased by 0.6 pct to 2.9%, and the increase in management expenses ratio. 0.5 pct to 2.2%, financial expense ratio increased by 0.3 pct to 1.5%; asset impairment losses increased to 2 billion yuan (no accrual in the same period last year); investment income increased 0.3 pct to 1.2%; loss due to asset disposal of 2.55 billion yuan (loss of 0.02 billion yuan in the same period last year); (3) the net profit loss amount to mother increased further compared to operating profit, mainly affected by income tax and minority shareholders' profit and loss. For details, 24H1 income tax of 0.46 Billions of yuan (-92% YoY), minority shareholders' profit and loss of 1.33 billion yuan (YoY -75%). The main reason these two figures are positive is that some cooperative projects are still profitable.

Looking back, according to the semi-annual report, the company is expected to deliver 0.188 million units for the whole year in '24 (an estimated decrease of 35% compared to '23), judging that there is some downward pressure on the annual settlement revenue scale.

24H1 sales fell by nearly 40%. With cash flow safety as the core, the pace of land acquisition was suspended. The company's 24H1 achieved full-caliber sales of 127.3 billion yuan (-38% YoY), 9.4 million square meters of sales area (-28% YoY), unit sales price of 13,553 yuan/square meter (YoY -14%). According to Kirui's ranking, the company's 24H1 full-caliber sales ranked third in the industry (down 1 place from the full year ranking in '23); the amount of land acquired in 24H1 was 0.8 billion yuan (-97% YoY), and 0.2 million square meters of equity acquisition area (-87% YoY) The equity floor price is 3,944 yuan/square meter (-78% YoY), and the estimated full-caliber investment strength is 1% (down 22pct from 23H1); in terms of soil storage, as of 24H1, the estimated unsold construction surface (in planning+under construction - not sold) is 50.52 million square meters (-20% YoY), corresponding to the 24H1 static removal cycle of about 2.4 years.

Actively deal with the pressure to pay open bonds through asset transactions and collateral. The amount of interest-bearing debt of the company as of 24H1 was 331.3 billion yuan (+4% from the end of '23), the monetary capital was 92.4 billion yuan (-7% from the end of '23), the company disclosed a net debt ratio of 62.0% (+7.3pct at the end of '23), the estimated balance ratio of 66.3% (+0.1pct compared to the end of '23), and disclosed a short-term cash debt ratio of 1.5 (-0.1 compared to the end of '23); structurally, the share of interest-bearing liabilities maturing within one year/at least one year was 31%/69%, respectively. 17pct/-17pct, bank loans/ payable bonds/ other loans accounted for 68%/20%/13%, respectively, +5pct/-4pct/ 1pct year over year, and domestic debt/foreign debt accounted for 83%/17%, respectively, +3pct/-3pct year over year; in addition, as of 24M7, the company achieved asset transactions of 20.4 billion yuan (including asset transactions and REIT issuance). 24H1's operating property loans totaled 21.9 billion yuan. Actively cope with the pressure to pay open market bonds through asset transactions and collateral. As of the end of 23, the investment real estate volume of 24H1 was 106.1 billion yuan (-4% compared to the end of 23), of which the amount already used as collateral was 32.6 billion yuan (13.5 billion yuan at the end of 23);

According to Wind Bond statistics, up to now, the balance of the company's open market bonds is 60.1 billion yuan (excluding supply chain financing), of which all 24-year open market bonds have been paid, and the maturity scales for 25-year/26/27/29-year are 36.2 billion yuan/12.4 billion yuan/9.4 billion yuan/2.1 billion yuan, respectively.

The revenue scale of the property management, long-term rental and commercial sectors continues to grow positively. (1) Property management: 24H1 realized revenue (including internal services) of 17.6 billion yuan (YoY +9%), including community space service revenue of 10.2 billion yuan (YoY +11%), commercial enterprise and urban space service revenue of 6.1 billion yuan (YoY +7%), AIoT and BPaaS solution service revenue 1.4 billion yuan (YoY +6%); (2) Long term rental: 24H1 realized revenue (including non-consolidated table) 1.7 billion yuan (YoY +5%), cumulative 0.183 million opened rooms (+5% year over year), 0.242 million managed rooms (+8% year over year), occupancy rate 95.2% at the end of 23 (-0.6 pct compared to the end of 23); (3) commercial:

Achieved revenue of 4.6 billion yuan (including non-consolidated table) of 4.6 billion yuan (YoY +7%), cumulative construction surface of 11.06 million square meters (YoY -1.1%), estimated at 13.31 million square meters (YoY -11.2%); (4) Logistics: 24H1 realized revenue (including non-consolidated table) 1.9 billion yuan (YoY -0.5%), of which high-standard warehouse revenue was 1.1 billion yuan (-6% YoY), and cold storage revenue 0.9 billion yuan (YoY +8%), cumulative The leasable area for opening is 10.44 million square meters (+6% YoY).

Investment suggestions: (1) The company's 24H1 performance turned to loss, mainly hampered by development business; (2) in development business, 24H1 sales declined by about 40%, with cash flow safety as the core, suspending the pace of land acquisition; (3) in terms of operating business, the revenue scale of the property management, long-term rental and commercial sectors continued to grow positively; (4) At the debt level, actively respond to open bond payments through asset transactions and collateral. The 24E/25E/26E EPS is expected to be -0.74/-0.13/0.21 yuan/share (-172%/-82%/-259% year-on-year, respectively), and the PE corresponding to the current stock price is -8.6/-49.2/30.9, respectively. Taking into account the fact that the company's sales are still facing downward pressure and the company has actively disposed of and collateralized assets to cope with public debt payments up to now, maintain the “gain” rating.

Risk warning: Operating property loans and asset sales fell short of expectations, the downturn in the industry further dragged down the company's sales, and support from major shareholders fell short of expectations, etc.