The dividend is stable and the performance is in line with expectations: the company's operating income in 2020 was 65.8 billion yuan (the same below), an increase of 6.8% over the same period last year, of which property sales revenue was 57.3 billion yuan, an increase of 5.3% over the same period last year, mainly due to the high average price of the carry-over project. the core return net profit was 3.99 billion yuan, down 7.9% from the same period last year, mainly due to a 1.7 percentage point decline in gross profit margin to 23.7%. The company maintains a steady profit level and its performance is in line with expectations. The company pays a rich and stable dividend, with a dividend of 0.35 yuan for the whole year of 2020, with a dividend rate of 21%, and the performance is in line with expectations.
Diversified access to land, regional focus, urban deep ploughing: in 2020, the company increased its land storage by 1206 million square meters, with a corresponding value of 328.8 billion yuan; the total land storage reached 5079 million square meters, reaching an all-time high.
The company continues to deepen the "regional focus, urban deep ploughing" strategy, accounting for 61.1% of the new land reserves in the Yangtze River Delta by value, and 72% of the first-and second-tier cities. In addition, the company has diversified ways of acquiring land, with the private market and the open market accounting for 40% and 60% of the value of the project respectively.
Rapid growth of contract sales: the company's contract sales in 2020 totaled 289.2 billion yuan, an increase of 43% over the same period last year, and achieved 116% of the annual sales target. Of this total, self-investment sales were 214.7 billion yuan, an increase of 59% over the same period last year, and agent construction sales were 74.5 billion yuan, an increase of 12% over the same period last year. The company has a sales value of 418.3 billion yuan in 2021, and contract sales are expected to reach 310 billion yuan, an increase of 7% over contract sales in 2020, which is about 74% of the current value.
The debt structure was optimized and the average financing cost decreased: by the end of 2020, the company's net debt ratio was 63.8%, which was stable compared with the end of 2019; the average financing cost was 4.9%, down 0.4 percentage points from the same period last year. The company's cash and bank deposits are 65.2 billion yuan, with sufficient cash on hand; the total loan is 119.2 billion yuan, accounting for 27.3% of the debt due within one year, down 9.3% from the end of 2019; the corporate debt structure is optimized; the cash-to-debt ratio is 2.0, and the liquidity is sufficient.
Our point of view: the company is based in Zhejiang, ploughing five major areas, focusing on first-and second-tier core cities, obtaining high-quality land storage through multiple channels, and controlling land acquisition costs. The company is expected to rely on efficient operation and product advantages, speed up sales removal and payback, and achieve steady growth. The company's current stock price corresponds to 4.9 times PE in 2020, and the dividend yield on the current stock price is about 4%. Investors are advised to pay attention.
Risk tips: macroeconomic growth slows; industry regulation and control policies tighten; liquidity tightens; company sales fall short of expectations; RMB depreciates.