1Q21's performance is in line with our expectations.
Shimao AG announced 1Q21 results: operating income 3.7 billion yuan, year-on-year + 31.4%; core net profit 500 million yuan, year-on-year + 6.2%; return to mother net profit 200 million yuan, year-on-year + 9.9%, in line with our expectations.
Revenue increased by more than 30%, and gross profit margin fell slightly. 1Q21's operating income increased from + 31.4% to 3.7 billion yuan compared with the same period last year, the after-tax gross profit decreased by 2.5ppt to 32.2% compared with 1Q20, and the rate of three expenses increased by 2.3ppt to 12.4%. Finally, the net profit returned to the home recorded a near double-digit growth.
The financial side is safe and sound, and there is still room for moderate expansion on the leverage side. At the end of 1Q21, the company's net debt ratio is 26% (20% at the end of 2020); the asset-liability ratio, excluding advance receipts, is 65% (the same as at the end of 2020); and the cash-to-short debt ratio is 2.31 times (excluding restricted cash, 2.41 times at the end of 2020).
Development trend
Sales increased rapidly in the first quarter and is expected to increase by nearly 40% for the whole year. The sales / sales area of 1Q21 company is from + 59% to 5.6 billion yuan / 290000 square meters respectively, and the corresponding sales price is 19239 yuan / square meters (25185 yuan / square meters in 2020). In 2021, we expect that with the support of the salable value of about 66 billion yuan (new push + rolling stock), sales are expected to increase to 38 billion yuan (27.2 billion yuan in 2020), implying a 57% removal rate and a 40% year-on-year growth rate.
The trend of high-intensity land acquisition continued in the first quarter. 1Q21 has added two new real estate development projects in Hangzhou and Changsha; the amount of land acquired is 2.6 billion yuan, accounting for 47% of the current sales (86% and 60% respectively in 2019-20), which is still at a high level despite a marginal decline; the amount caliber equity ratio is 51% (37% and 55% respectively in 2019-20). We expect that the company will continue to actively expand reserves in the future to provide strong support for the rapid growth of sales and rental revenue.
Performance is expected to pick up significantly in 2021. We estimate that the company's land sales revenue in 2021 will be + 15% compared with the same period last year, which can contribute 1.75 billion yuan to the net profit returned to the mother. With the gradual fading of the impact of the epidemic, the company's rental income is expected to achieve the target of 1.49 billion yuan (year-on-year + 30%), corresponding to the net profit of 420 million yuan. Considering that the change in the fair value of investment real estate is expected to return to the level before the epidemic (2019), the company can achieve a net profit of 2.36 billion yuan (+ 52% year-on-year) in 2021, corresponding to a core net profit of 4 billion yuan (+ 24% compared with the same period last year).
Profit forecast and valuation
Keep the company's profit forecast for 2021 amp. 2022 unchanged. The company's current share price trades at 6.7pm 5.8 times 2021max 2022 forward price-to-earnings ratio. Maintain the neutral rating and maintain the target price of 5.13 yuan, corresponding to 8.2 prime 7.1 times 2021 Universe 2022 target price-earnings ratio, which has 21% upside space compared to the current stock price.
Risk
The scope and extent of COVID-19 's epidemic situation exceeded expectations, and the sales and rental income fell short of expectations.