The growth of income and profit was steady, and the core net profit of returning to the mother increased by 20.1%. As of December 31, 2020, the company's operating income reached 71.08 billion yuan, an increase of 23.7% over the same period last year. Among them, the income from property sales was 54.86 billion yuan, an increase of 34.1% over the same period last year. The company realized 13.02 billion yuan of net profit attributable to shareholders, an increase of 15.51% over the same period last year; the core net profit attributable to shareholders was 12.04 billion yuan, an increase of 20.1% over the same period last year, still maintaining a high growth on the basis of 10 billion yuan. The company achieved a gross profit margin of 30.0%, down 1.5 percentage points from a year earlier, and a core profit margin of 17.4%, down 0.5 percentage points from a year earlier.
The sales of rights and interests exceed the target, and the certainty of performance growth is high. In 2020, the company continued to perform strongly in Guangdong-Hong Kong-Macau Greater Bay Area. By December 31, 2020, the company had achieved equity contract sales of 120.69 billion yuan, an increase of 31.9% over the same period last year, exceeding the annual sales target; the equity sales area was 7.452 million square meters, with an average price of 15637 yuan per square meter during the period, with a positive growth rate from negative to positive. During the reporting period, the company exceeded its target of 110 billion yuan in equity sales this year.
Focus on the core metropolitan area, speed up the incubation efficiency of urban renewal. As of December 31, 2020, the total land reserve area of the company is about 7125.1 square meters, accounting for 93% of the total land storage area in first-and second-tier cities. During the reporting period, the company renewed its business layout in 11 cities, with a value of more than 710 billion yuan, 95% of which was located in the core city of Guangdong-Hong Kong-Macau Greater Bay Area.
The capital structure is sound and the dividend is generous and stable. The company's three red line indicators are in the green range. By the end of 2020, the company's net debt ratio, asset-liability ratio after deducting accounts received in advance and cash short-debt ratio were 61.4%, 69.8% and 1.84 times respectively, 9.3 percentage points lower than at the end of 2019; and the net debt ratio was 6.0 percentage points lower than at the end of 2019. In terms of dividends, it is proposed to pay a dividend of HK $0.43 per share in mid-2020 and HK $0.58 per share at the end of 2020, with the total dividend for the whole year accounting for 40 per cent of the net profit attributable to the mother. In the past three years, the dividend payout rate of the company is relatively stable, and the dividend yield is considerable.
Investment advice: maintain a "better than the market" rating. We estimate that the total operating income of the company in 2021 and 2022 is 87.378 billion yuan and 103.877 billion yuan respectively. We expect the company to achieve a net profit of 14.78 billion yuan and 16.893 billion yuan in 2021 and 2022, and the EPS of the above income and net profit in 2021 and 2022 are 2.68yuan and 3.06yuan, respectively. As of April 08, 2021, the company closed at HK $12.70 (RMB 10.73), corresponding to 4.01,3.51 times of PE in 2021 and 2022, respectively, and a PEG value of 0.27 in 2021. We give the company 6-7XPE in 2021 with a reasonable value range of HK $19.01-22.18 (RMB 16.06-18.74) and maintain a "better than the market" rating.
Risk hint: the company's sales progress is not as expected; the urban renewal project is not as expected. Full text 1 Hong Kong dollar = 0.8450 RMB.