Event: on March 30, Shimao Group released its annual results for 2010. the company realized operating income of 135.353 billion yuan, an increase of 21.4% over the same period last year, a net profit of 12.628 billion yuan, an increase of 15.88% over the same period last year, and basic earnings per share of 3.62 yuan, an increase of 9.37% over the same period last year, basically in line with expectations.
In addition, a full-year dividend of HK $1.80 per share is proposed.
Gross profit margin declined slightly, Shimao Services successfully listed: property sales accounted for 93.2% of revenue, property services accounted for 4.6%, hotel operations and commercial operations accounted for 2.2%, and property services accounted for an increase of 2.2pct over the previous year. In terms of property sales, the company achieved a settlement area of 8.306 million square meters, an increase of 18.3% over the same period last year; settlement income reached 126.13 billion yuan, an increase of 19.8% over the same period last year, and the average settlement price increased to 15187 yuan from 15001 yuan in the same period last year. In terms of profit margin, the company's overall gross profit margin in 2020 was 29.3%, a slight decline in 1.3pct compared with the same period last year. In property management and other businesses, the operating income reached 6.235 billion yuan, an increase of 130.8% over the same period last year. Shimao Services, a subsidiary of the company, increased its management area by 114.7% to 14.6 million square meters in 2020 compared with the same period last year, and its reserve area increased by 66.7 percent to 5500 million square meters. Shimao Services successfully completed its listing in Hong Kong in 20 years, and the company made a profit of 2.94 billion yuan from the sale of part of its stake in Shimao Services.
During the year, it was successfully reduced to green, and the financial situation remained sound: in 2020, the company successfully reduced its three red lines from yellow to green. At the end of 2020, the asset-liability ratio of the company excluding accounts received in advance was 68.1%; the net debt ratio decreased by 50.3%; and the cash short-debt ratio after deducting pre-sale regulatory funds was 1.16 times. At the same time, Moody's and S & P upgraded the company's rating one notch to Ba1 and BB+, positive respectively during the year. The comprehensive financing cost is 5.6%, which is the same as last year, and the company's financial affairs remain relatively sound.
Sales increased steadily, with the 2021 target 330 billion: the company achieved a contract sales area of 17.126 million square meters for the whole year, an increase of 16.8% over the same period last year; the contract sales amount was 300.31 billion yuan, an increase of 15.5% over the same period last year, and gradually recovered the impact of the epidemic after the second quarter. The annual plan was successfully completed, and the annual removal rate was 63%. The company can sell 550 billion yuan in 2021, 87% of which are located in first-and second-tier cities, with a sales target of 330 billion yuan, corresponding to a removal rate of about 60%, a year-on-year growth rate of 10%.
Take the land carefully and dig deep into the core urban agglomeration: the company added 15.35 million square meters of full-caliber construction area for the whole year, down 50.3% from the same period last year; the corresponding full-caliber land price was 90.81 billion yuan, down 41.7% from the same period The average land price is 5916 yuan per square meter, accounting for 33.7% of the average sales price in the same period. In terms of land price, the land prices of first-and second-tier and strong third-and fourth-tier cities account for 91% of the company's annual land price, deeply ploughing the core urban agglomeration, and taking land cautiously under the tightening policy environment. By the end of 2020, the company has 434 projects, corresponding to a full-caliber construction area of 81.75 million square meters, with a corresponding value of more than 1.38 trillion yuan, of which Guangdong-Hong Kong-Macau Greater Bay Area and the Yangtze River Delta account for 28.6% and 25% respectively.
Investment suggestion: the company's property sales grow steadily, ploughing the core urban agglomeration, and the land reserve is of high quality. Financial stability, the year has been reduced to green, financial advantages are highlighted. In addition, the coordinated development of diversified business is progressing smoothly. We are optimistic about the management and operation capability of the company's leading industry, and expect that the future profit margin will continue to be in the industry leading position. We expect the company to achieve a net profit of 140.54 yuan, 161.75 yuan and 18.605 billion yuan respectively in the year 21-23, an increase of 11.3%, 15.1% and 15.0% respectively per share, corresponding to PE 5.1,4.5 and 3.9 times. In addition, considering the company's annual dividend rate of more than 40% and dividend yield of nearly 7%, we maintain the "recommended" rating.
Risk tips: the development of the epidemic exceeded expectations, property taxes exceeded expectations, real estate policies tightened more than expected, and sales settlement growth fell short of expectations.