Maintain the "buy" rating, the target price is HK $12.00: the company's sales scale is growing steadily, diversified acquisition of land (M & A + urban renewal + industrial coordination) effectively control costs, 2020 companies actively take land in the current hand-on-hand value is sufficient. The hatching speed of the old reform is accelerating, and the company is rich in old reform reserves (60 projects in hand, with a saleable value of 600 billion yuan). It is estimated that the salable value of urban renewal incubation will exceed 150 billion yuan in the next three years. The acceleration of incubation is expected to help keep the overall profit margin stable (the expected net profit rate of the urban renewal project is 15% +). We estimate that the company's operating income in 2022 is 848,102.9 billion yuan, an increase of 25% and 21% over the same period last year, and the core net profit is 58,000,000 yuan, an increase of 20% and 21% over the same period last year. We maintain our "buy" rating and lower our target price from HK $13.50 to HK $12.00, corresponding to 5x PE in 202112022.
The company's core net profit increased by 18% over the same period last year, and the performance was in line with expectations: the company's operating income in 2020 was 67.8 billion yuan (the same below), an increase of 34% over the same period last year; the core net profit was 4.9 billion yuan, an increase of 18% over the same period last year.
The gross profit margin was 25.1%, down 4.6 percentage points from the same period last year; the core net profit margin was 7.2%, down 1.0 percentage points from the same period last year. The dividend was intensified in 2020, with a final dividend of 66 per share and a special dividend of 11 per share, totaling 77 per cent per share, an increase of 40 per cent over the same period last year. The total dividend for the whole year was 2.1 billion yuan, accounting for 43 per cent of the core net profit.
Steady growth in sales scale: the company achieved 133 billion yuan in sales in 2020, with a sales area of 1288 million square meters, an increase of 13% and 10% respectively over the same period last year. The average sales price was 10325 yuan per square meter, an increase of 2% over the same period last year. The company's sales target for 2021 is 150 billion yuan, an increase of 13% over the same period last year. The salable value for the whole year is 220 billion yuan, and the corresponding removal rate target is 68%. It is estimated that goods will be pushed for 44% in the first half of the year.
Accelerated incubation of urban renewal: in 2020, the company added a total of 2015 million square meters of land reserve, 1188 million square meters of land storage area, 59% of rights and interests, 45.1 billion yuan of equity land price, 3975 yuan of floor land price per square meter, and the ratio of land to goods is about 1. 3%. The new land reserves from M & A, auction and urban renewal incubation accounted for 57%, 27% and 16% respectively (an increase of 14 percentage points over the same period last year). By the end of 2020, the company's total land reserve was 5718 million square meters, an increase of 27 per cent over the same period last year and 71 per cent of equity.
Financing costs fell: the company's net debt ratio was 82.7% at the end of 2020, up 7.6 percentage points from a year earlier.
The average financing cost was 7.2%, down 0.3 percentage points from the same period last year. At the end of the period, the company's paper cash was 70 billion yuan, interest-bearing liabilities were 114.9 billion yuan, of which short-term liabilities accounted for 46%, and the cash-to-debt ratio was 1.3. Excluding advance receipts, the asset-liability ratio is 78%, down 3 percentage points from the same period last year, keeping the yellow queue.
Risk tips: macroeconomic growth slows; industry regulation and control policies tighten; liquidity tightens; company sales fall short of expectations; RMB depreciates.