Main points of investment
Our point of view: the company's performance declined in 2020, mainly due to the high-priced land carried forward in the previous two years, most of which are distributed in high-energy cities in the Yangtze River Delta with serious price restrictions and low gross profit margin, and it is expected that it will take some time for the high-priced land to be fully digested. However, the overall gross profit margin is expected to pick up gradually, leading to a gradual rebound in performance. The current share price on sale is three times the 2020 PE and the current dividend yield is 9.1%.
The core net profit of the company decreased by 24% compared with the same period last year, and the performance was in line with expectations: the company's operating income in 2020 was 48.3 billion yuan (the same below), down 6.1% from the same period last year; the net profit of the company was 2.4 billion yuan, down 23.0% from the same period last year. The gross profit margin was 11.0%, down 13.2 percentage points from the same period last year; the core net profit margin was 5.0%, down 1.1 percentage points from the same period last year. For the whole year, the dividend per share is HK50 cents, and the total dividend accounts for 29% of the net profit.
Maintain a high level of elimination: the company's sales target for 2021 is 160 billion yuan, an increase of 7% over the same period last year.
The salable value for the whole year is 230 billion yuan, and the corresponding removal rate target is 70%. Over the years, the actual removal rate has been maintained at a good level of about 70%.
Maintain the strength of land acquisition in the Yangtze River Delta: in 2020, the company added 50 new land projects, the new land reserve GFA is 8.72 million square meters, the equity GFA is 4.02 million square meters, and the proportion of rights and interests is 46%, of which the Yangtze River Delta accounts for half. The new land price is 62.3 billion yuan, and the average land cost is 9596 yuan / square meter.
In terms of first-level development progress, Taiyuan City of time has a new right of 890,000 square meters, with 4.57 million square meters left in the urban renewal project so far. By the end of the year, the company's total land storage area was 2871 million square meters, an increase of 6.5 percent over the same period last year. The overall average land cost was 7902 yuan per square meter, accounting for 37 percent of the average sales price.
Financing costs continued to fall: the company's net debt ratio was 83% at the end of 2020, up 13 percentage points from a year earlier. At the end of the year, paper cash was 29.9 billion yuan, interest-bearing liabilities were 71.9 billion yuan, of which short-term debt accounted for 35%, RMB debt accounted for 66%. The cash-to-debt ratio is 1.1, excluding the pre-sale asset-liability ratio of 69.9%. The average financing cost was 6.6%, down 30bps from the same period last year.
Risk hints: macroeconomic growth slows, industry restrictions tighten, liquidity tightens, commercial housing sales fall short of expectations, and RMB depreciates.