The company released its 2020 results, KuaiBao. In 2020, the company achieved operating income of 481.3 billion yuan, an increase of 12.4% over the same period last year. The net profit of shareholders belonging to listed companies was 13.72 billion yuan, down 6.9% from the same period last year, and EPS was 1.13 yuan.
Brief comment
Real estate infrastructure two-wheel drive revenue increased steadily, after deducting non-net profit is still positive growth. During the period, the company's operating income achieved a steady growth of 12.4%, mainly due to the steady growth of both the real estate carry-over scale and the revenue of large infrastructure member enterprises, reaching 2171 yuan and 280.1 billion yuan respectively, up 12% and 19% over the same period last year. However, the main reasons why the growth rate of net profit of home ownership is lower than that of revenue growth is as follows: 1. The gross profit margin of the real estate business has declined, with 2020H falling 2.2 percentage points year-on-year to 25.8%. Due to the decline in investment income of diversified businesses affected by the epidemic, 2020Q3 has dropped by 48.4% year-on-year. However, during the period, the company achieved a net profit of 13.1 billion yuan after deduction, an increase of 3.2% over the same period last year, indicating that the profitability of the basic set of the company's business is still relatively sound. We expect that the company's performance will remain stable after 2021 as the company's gross profit margin stabilizes and investment returns improve.
The scale of sales decreased slightly, but the quality of rebate was improved, and the structure of land acquisition was optimized. For the whole year, the company achieved sales of 358.35 billion yuan, down 7.7% from the same period last year, the sales area was 29.093 million square meters, down 10.7% from the same period last year, and the average sales price was 12317 yuan / ping, an increase of 3.4% over the same period last year.
During the period, the company's sales structure was significantly optimized, realizing residential sales of 272.5 billion yuan, an increase of 8% over the same period last year, accounting for 76%, while the proportion of commercial offices decreased to 24%. At the same time, the quality of the rebate was significantly improved, with the rebate amount reaching 308.9 billion yuan and the payback rate of 86%, an increase of 9 percentage points over the same period last year. During the period, the company strengthened the management and control of key projects such as super-senior management, convention and exhibition, and trade port. Previously, projects such as Wuhan Greenland Center and Chengdu Greenland Center, which received high market attention, were progressing smoothly. In 2020, the company acquired a total of 90 projects, with an additional capacity building area of 29.32 million square meters, corresponding to a total land price of 92.9 billion yuan, a total value of about 333 billion yuan, and an average floor price of 3168 yuan per square meter. About 70 per cent of the new projects are in first-and second-tier cities by value, up from 40-50 per cent in 2018-2019.
The effect of reducing leverage is remarkable, and the orange file is reduced to yellow file. In 2020, the company achieved remarkable results in reducing leverage. During the year, the ratio of short-term cash debt increased rapidly, with a cumulative increase of more than 40% to 1.1%. The net debt ratio decreased significantly, falling nearly 50 percentage points to about 106%; the total amount of interest-bearing liabilities decreased by about 45 billion yuan compared with the high point of the year, and the net operating cash flow in a single month was positive and continued to increase steadily. As a result, the number of over-standard indicators under the three red lines has been reduced from 2 to 1, and from orange to yellow.
Lower the profit forecast and target price, and keep the rating of the increase unchanged. We adjust the company's EPS for 2020-2022 to 1.13max 1.21x1.29 (the original forecast is 1.44max 1.73x2.07). Considering that the average PE valuation of the comparable company in 2021 is 6X, we give the company a valuation level of 6X in 2021, corresponding to the target price of 7.26yuan (the original target price is 10.08 yuan).
Risk hint: the impact of COVID-19 's epidemic situation exceeded expectations, resulting in the company's sales falling short of expectations; the coordinated development of diversified industries was not as expected.