“Development+Ownership” helps future operations to be more stable, maintains the “buy” rating of Golden Land commercial land acquisition prospects, focusing on core Tier 1 and 2 cities, with abundant land reserves and low costs. At the same time, the company also owns a large number of high-quality properties in core cities. We adjusted the company's 2021-2022 profit forecast and added a profit forecast for 2023: the estimated net profit for 2021-2023 is 50.3, 5.79, and 6.66 billion yuan respectively (the value before 2021/2022 was 4.999/5.77 billion yuan), EPS is 0.30, 0.35, and 0.40 yuan respectively. The current stock price corresponds to PE 3.5, 3.0, and 2.6 times, maintaining the “buy” rating.
Accelerated settlement drives impressive performance growth in 2020
Jindi Commercial Real Estate announced its 2020 results: in 2020, the company achieved operating income of 16.322 billion yuan, an increase of 39% over the previous year; Guimu's net profit of 4.355 billion yuan, an increase of 15% over the previous year; the core net profit of 4.678 billion yuan, an increase of 14% over the previous year, and basic earnings per share of 0.27 yuan. The company's high revenue growth rate is mainly due to the company's centralized settlement of property development, which has driven a clear growth rate of property development revenue. Property development, property investment and management, and small loan businesses accounted for 93.1%, 4.9%, and 2.0% respectively. The company's gross margin declined slightly, with a gross profit margin of 40.4% for the whole year.
Sales are impressive, and land acquisition is diversified
In 2020, the company achieved sales of 75.17 billion yuan, an increase of 18% over the previous year; the sales area was 3.388 million square meters, an increase of 8% over the previous year, accounting for a stable share of 31% of Jindi Group's sales. The company entered seven new cities in 2020, acquiring 5,577 million square meters of land throughout the year, an increase of 13% over the previous year; the land acquisition amount was 44.16 billion yuan, or 58.7% of the current sales amount; the average land acquisition price was 8,300 yuan/square meter, which was 34% of the current average sales price. The company's land acquisition methods are more diverse, and methods such as land acquisition, old reform, and acquisition have all been successful. By the end of 2020, the company had 18.63 million square meters of land reserves, an increase of 22% over the previous year; by city: 21% were in first-tier cities, while the remaining 60% were in second-tier cities such as Suzhou, Hangzhou, Nanjing, and Qingdao.
Financial soundness, ranking in the “green” of the three red lines
At the end of 2020, the ratio of long-term and short-term debt was 89% and 11% respectively. Among them, bank loans accounted for 26% and related parties accounted for 74%. The company is in the “green range” of the three red lines. After excluding advance collection, the balance ratio is 61%, the net debt ratio is 52%, and the short-term cash debt ratio is as high as 3.61 times. In an environment where the financing environment is tightening, the company actively uses quick repayment and other channels to reserve high-quality capital for the company. The overall interest rate is around 4.8%.
Risk warning: industry sales fluctuations; policy adjustments lead to business risks.