Core views:

In 2020, the investment layout of Dima Co., Ltd. expanded smoothly against the market, adding 5.168,000 square meters of land throughout the year, with an investment ratio of up to 2.8, effectively guaranteeing subsequent performance growth. At the same time, new cities were entered through cooperation, using lower costs to leverage higher investment scales and reduce investment risks.

1. Main business revenue increased 8.2% year-on-year, with major contributions from central China and southwest China

Looking at the subregion, the company's main business revenue is mainly contributed by the central and southwest regions of China. However, at the same time, the company's profit level declined. The analysis revealed three main reasons: first, 2020 carried over multiple last-end projects, and the gross margin of such projects was low; second, the company's investment in 2020 increased, project scale expanded rapidly, and management expenses rose, which affected the company's net profit margin level.

2. Increased investment and continuous expansion of urban layout

In 2020, Dima Co., Ltd. continued to select and expand its investment strategy, adhering to the strategy of focusing on Tier 1 and 2, with Tier 1 and 2 being extended and complemented by other cities with potential for population inflow. Thirty-five new pieces of land were added throughout the year, with a construction area of 5.168,000 square meters, a year-on-year increase of 72.3% from 3 million square meters in 2019, and an area to sales ratio of 2.8, laying a solid foundation for the company's performance growth in the later stages.

3. The capital situation is good, and the financing cost remains stable

A good financial situation is a guarantee for the smooth development of the company's investment work. The three debt repayment indicators of Dima Co., Ltd. are all below the red line of the industry. They are green housing companies, and the pressure to repay their debts is low. The company's financing costs remain stable. In the future, financing channels can be reasonably expanded to reduce the company's financing costs.

In 2020, the investment layout of Dima Co., Ltd. smoothly expanded against the market, adding 5.168,000 square meters of land and construction area throughout the year

Meters, the investment ratio is as high as 2.8, which effectively guarantees subsequent performance growth. At the same time, many new cities are developed through cooperation, and the use of lower revenue is lower

This leverages a higher investment scale to reduce investment risks.

1. The main business revenue increased 8.2% year on year, mainly contributed by the central and southwest regions of China. In 2020, Dima Co., Ltd. achieved operating income of 21.27 billion yuan, an increase of 8.0% over the previous year, of which the main business contributed 20.97 billion yuan. By industry, the company's real estate industry and property services accounted for a large portion, achieving a total revenue of 19.58 billion yuan, up 7.5% from the previous year, accounting for 92.0% of total operating income. Looking at the subregion, the company's main business revenue was mainly contributed by the Central China region and the Southwest region, which achieved annual revenue of 6.48 billion yuan and 6.70 billion yuan respectively. However, the fastest increase in revenue was in the East China region and the Nanjing region, which achieved operating income of 4.0.0 billion yuan and 2.55 billion yuan respectively, with year-on-year increases of 101.8% and 175.4%.

At the same time as the company's operating income increased, it also faced a decline in gross profit margin and net profit margin. The company's gross profit margin in 2020 was 20.4%, down 8.3 percentage points from 2019, and the net profit margin fell 1.3 percentage points year on year. There are two main reasons: first, Dima Co., Ltd. carried over a number of last-end projects in 2020, and the gross margin of such projects was low; second, the company's investment in 2020 increased and the project scale expanded rapidly, so management expenses also increased 31.3% year-on-year to 1.04 billion yuan, which affected the company's net profit margin level. However, the first two reasons are temporary factors. The third point is that from a long-term perspective, as the company's project scale continues to expand, management expenses will also be amortized, and the company's profit level is expected to increase accordingly.

It ranked among the top construction areas. Among them, the land reserve to be developed in the Xiangyang region was as high as 812,000 square meters; it also broadened the scope of the company's investment, taking over the cities of Shijiazhuang and Qixia to the north. The construction area to be developed reached 211,000 square meters, and the new cities of Xuzhou and Zhaoqing were expanded to the south, with a construction area of 40,000,000 square meters to be developed.

On the project development issue in new cities, the company chose cooperation as the main focus, such as Qixia and Shijiazhuang. The company's equity ratio was 33.0% and 49.1% respectively. However, in the central and southwest regions where it is deeply cultivated, most of the company's projects maintained an equity ratio of more than 50%. For example, Zunyi, Changsha, and Xi'an accounted for 98.3%, 94.7% and 90.0% respectively. We believe that adopting a cooperative approach in the early stages of outward expansion can help the company reduce capital investment and leverage a larger scale using less costs, but when deep cultivation reaches a certain point and continues to maintain low equity interests, it is not conducive to the improvement of the company's actual profits. Therefore, early cooperation to open up the market and increase the share of equity later is a wise choice.

3. The capital situation is good, and the financing cost remains stable

A good financial situation is a guarantee for the smooth development of the company's investment work. As of December 31, 2020, the company's net debt ratio was 48.2%, the balance ratio excluding prepaid accounts (double deduction) was 69.1%, and the short-term cash debt ratio (strict version) was 1.2. All three indicators met the requirements of the three red lines. It was a green housing enterprise, and the pressure to repay the debt was low.

The company's financing costs remained stable at 8.7% in 2020. In the future, while expanding in scale, the company can also rationally expand financing channels to reduce the company's financing costs.