Brief performance review

On October 25, 2024, the company disclosed the operating conditions and performance for the third quarter of 2024: from January to September 2024, it achieved revenue of 109.58 billion yuan, -6.7% year-on-year; achieved operating profit of 18.18 billion yuan, or -19.6% year-on-year.

Management analysis

Business performance is under pressure in the short term. Due to the pace of project carry-over and the structural impact of high land prices and low gross profit projects, the company's revenue and operating profit have declined since this year, and the decline in operating profit is greater than the decline in revenue.

Strong sales resilience and improved sales rankings. From January to September 2024, the company achieved sales of 198.848 billion yuan, compared to -16.8% compared to -32.5% in the same period. The company's sales resilience was significantly stronger than that of the TOP10 real estate companies; the sales area was 7.6304 million square meters, or -26.1% year-on-year. From January to September 2024, the company ranked second among the top 100 real estate companies in terms of full-caliber sales, up one place from the same period last year.

Investments are focused on Tier 1 and 2 cities. From January to September 2024, the company acquired 12 new land cases in 9 cities, with a total land acquisition amount of 20.3 billion yuan and an equity acquisition amount of 18.6 billion yuan. The equity ratio was as high as 91.5%. The company's land acquisition is highly focused on Tier 1 and 2 cities. First-tier cities account for 51% of the total amount of land acquired, while second-tier cities account for 49%. Overall, the company still maintains a certain level of land acquisition intensity. In the first nine months, the company ranked 5th in the total equity land acquisition amount ranking of the Central Index Institute.

Finances remain stable. The company continues to maintain a sound financial position and strong cost advantage, and the net loan ratio and financing costs remain in the lowest range in the industry.

Profit Forecasts, Valuations, and Ratings

The company's sales are stronger than the market, the investment is highly focused, and the short-term performance is expected to be under pressure. After the industry stops falling and stabilizes, the company is expected to take the lead in benefiting, and future performance is expected to return to a growth trajectory. We slightly lowered the company's 2024-2026 net profit to 24.25 billion yuan/26 billion/ 27.09 billion yuan (the original forecast was 26.71 billion yuan/28.96 billion yuan/31.1 billion yuan), with year-on-year growth rates of -5.3%, 7.2%, and 4.2%, respectively. The current PE valuation of the company's stock is 6.0x/5.6x/5.4x, maintaining a “buy” rating.

Risk warning

Sales in the real estate market continued to be sluggish; the North China market declined; and the RMB exchange rate fluctuated.