Incident: On September 19, the company released the “Goldland Group Investor Relations Activity Record Form”.

Comment: Beyond the peak of debt repayment, maintaining the credit bottom line, sales are weaker than the market, and performance continues to be under pressure.

Crossing the peak of debt repayment and maintaining the credit bottom line: In the first half of '24, the company paid off various public debts as of the end of the first half of '24. The total interest-bearing debt was 81.7 billion yuan (down 10.2 billion yuan from the end of '23), short-term debt accounted for 47.4%, bank loans accounted for 88.9%, and comprehensive financing costs were 4.38%, of which 8.7 billion yuan was payable bonds due in one year, including the balance of US dollar bonds of about RMB 3.4 billion. In August '24, the company paid off its 0.48 billion dollar debt as scheduled. Currently, the company has no surviving foreign dollar bonds. The company's remaining open market debt to be repaid within 24 years is a total of 3 billion yuan due from November to December. As of the end of the first half of '24, the company had cash capital of 23.1 billion yuan and a remaining credit limit of 164.2 billion yuan in banks and financial institutions. After excluding advance payments, the balance ratio was 60.0%, the net debt ratio was 53.0%, and the short-term cash debt ratio was 0.54 times. Overall, the size of the company's interest-bearing debt has declined steadily, and the overall level of financial leverage is stable. Short-term cash flow is still under pressure, but cash flow turnover will be more relaxed after the peak period of public debt.

Investment in land acquisition has slowed, and sales are weaker than the market: From January to August 2024, the company achieved a cumulative sales area of 3.22 million square meters, a year-on-year decrease of 46.4%; cumulative sales of 47.6 billion yuan, a year-on-year decrease of 56.3%. During the same period, the trading sales of the top 100 real estate companies fell by about 36.5% year on year. The company's sales performance was weaker than that of the market, mainly due to weak market demand and the slowdown in the company's land acquisition activities in the past year. As of the end of June '24, the company's total land reserves were about 35.89 million square meters, of which Tier 1 and 2 cities accounted for about 75%, and there was plenty of land available for sale.

Development settlement performance was sluggish, and performance continued to be pressured in the short term: in the first half of '24, the company achieved revenue of 21.1 billion yuan, down 42.7% year on year, of which real estate settlement revenue was 14.1 billion yuan, down 54.7% year on year, mainly due to the decline in real estate sales in the previous period; the company's comprehensive gross margin was 11.0%, down 5.4 pct year on year. Among them, gross margin of real estate development fell 5.6 pct to 9.2% year on year. The gross profit of the development business was still declining, dragging down the overall gross profit performance; the company's net profit to mother was- 3.36 billion yuan, a year-on-year decrease of 319.4%, mainly due to the decline in the settlement scale of real estate development and gross profit, and significant accrual of asset impairment losses (2.09 billion yuan) and credit impairment losses (0.79 billion yuan), etc., and the short-term performance is expected to remain under pressure.

Profit forecast, valuation and rating: Considering the slow recovery in demand in the real estate market, the company's sales and profit margin may still be under high pressure, and there is a risk of impairment in inventory, we lowered the company's 24-25 net profit forecast to -6.9/-3.29 billion yuan (the original forecast was 7.9/8.9 billion yuan), and the new company's net profit forecast for 26 years is -1.64 billion yuan. The current stock price corresponds to the company's PB for 24-26 of 0.32/0.34/0.35, respectively Double, as a leading and established real estate enterprise, the company has strong development and operation capabilities. It has gone through the peak of public debt in a short period of time, and its cash flow turnover is more relaxed. However, at present, the company's sales pressure is high, cash flow is still under pressure, the downward pressure on performance is high, and there is no sign of improvement in the short term. We downgraded the company's rating to “neutral.”

Risk warning: Risks such as overdue debts, falling short of expectations in sales and project delivery, and market downturn exceeding expectations.