Event: the company released the 2020 annual report, with revenue of 71.32 billion yuan, year-on-year + 23.6%, net profit of 12.85 billion yuan, + 15.7%, and core profit of 12.04 billion yuan, + 20.1%.
The decline in gross profit margin is relatively small, and profitability is higher in the industry. During the period, the company achieved a gross profit margin of 30.0%, year-on-year-1.5pct. As the high land price projects acquired in 2016-17 have entered the settlement channel, the industry has a common problem of narrowing profit margins under the influence of price limits. The company's gross profit margin for the current period is relatively small and the absolute level is at a higher level in the industry; the net profit rate is 18.3%, year-on-year-1.3pct, and the contract debt was 42.485 billion yuan at the end of the period, + 63.2% year-on-year. In terms of expense rate, the three fees / revenue during the period is 4.5%, which is the same as the same period last year, the sales fee / revenue is 5.0%, year-on-year + 0.1pct, and the financial fee / revenue is 0.4%, year-on-year + 0.1pct.
The target sales growth rate for the next three years is 20%, and there is strong certainty in the transformation of urban renewal. During the period, the company realized equity sales of 120.69 billion yuan, + 31.9% compared with the same period last year. The company's target equity sales increased by 20% in 2021. CAGR20%; achieved equity sales area of 771.82 million square meters, + 15.0% compared with the same period last year. The average sales price was 15637 yuan per square meter, + 14.7% year on year. The company estimates that the available value of goods for the whole year of 2021 is 240 billion yuan, of which the new push value is 200 billion yuan. In terms of land acquisition, the company added 1857 million square meters of land storage during the period, and the corresponding value of the corresponding goods was 386.5 billion yuan, of which the corresponding value of urban renewal was 300.3 billion yuan, + 78% of the same period last year. In terms of total land storage, at the end of the period, the company recorded a total land storage of 7200 million square meters, with a corresponding value of 1.2322 trillion yuan, and an average land-to-goods ratio of 32%, of which first-and second-tier cities accounted for 93%, and the Dawan area and the Yangtze River Delta accounted for 85%. The company's total soil reserves are of high quality and abundant. In terms of urban renewal, the conversion value of the company during the period is 30.5 billion yuan, and the company expects to achieve an average annual conversion value of 50 billion yuan in 2021-23, of which the number of conversion projects will significantly increase and the proportion of old village conversion will increase. On the whole, urban renewal and expansion has become the strongest engine on the investment side of the company, and the high profit margin of its project (net profit margin of 1520%) supports the company to maintain a high level of profitability while generally declining in the industry.
The financing cost is optimized and the rating is upgraded, with the three red lines in the green category. During the period, the company was upgraded to Ba2 by Moody's Corporation, with a new financing cost of 5.45% (year-on-year-0.55pct) and a weighted average financing cost of 5.60%. In terms of the three red lines, the asset-liability ratio (excluding contract liabilities) is 69.8%, the net debt ratio is 61.4%, and the cash short-debt ratio is 1.8. The three red lines are up to the standard in an all-round way. Short-term debt accounted for 29.1%, year-on-year-13.4pct; long-term debt accounted for 70.9%, year-on-year + 13.4pct, debt structure was further optimized.
Investment advice: the company is given a buy rating for the first time. It is estimated that the EPS of the company in 2021-23 is 2.72 yuan and 3.23 yuan, respectively, and the corresponding PE is 2.74 times that of 3.91.
Risk hints: there are repeated uncertainties in the epidemic; performance forecasts and valuation judgments are not up to expectations.