High performance growth, land sales waiting for development

On April 29, the company released its quarterly report, during which the company achieved revenue of 6.89 billion yuan, year-on-year + 26.2%, net profit of 270 million yuan, + 42.0% year-on-year, and diluted EPS0.06 yuan. The company has been aggressive in the past 21 years, the sales target has crossed the threshold of hundreds of billions of dollars, and commercial real estate will also be concentrated in the market. We expect EPS to be 0.36,0.43 and 0.49 yuan in 2021-2023, maintaining the "overweight" rating.

The settlement is accelerated, the rights and interests are improved, and the performance is highly increased.

Development settlement volume increased during the period, commercial real estate sector, due to the impact of last year's epidemic led to a low base and two new projects entered the market in the second half of 20 years, development and commercial real estate sector income increased. Due to the downward profit margin of the settlement project and the fact that the property held at the same time was greatly affected by the epidemic in the same period last year, under the influence of two factors, the gross profit margin of the settlement project during the period was-13.4pct to 30.3%, which was higher than that of the whole of last year-1.2pct. Due to the improvement of the financial structure, the company's financial expense rate is-3.4 pct compared with the same period last year. In addition, due to the year-on-year increase in equity, the proportion of minority shareholders' equity is-13.9 pct compared with the same period last year. The company's operation is back on track, and we expect the full-year deduction of non-net profit to return to more than 19 years' level.

The sales target for the whole year is hundreds of billions, and the land acquisition may be carried out.

According to Carey data, the company's full-caliber sales area of 71.4 million square meters, sales of 13.16 billion, + 94% compared with the same period last year, ranking 59th in the industry. In terms of expansion, the company mainly distributes first-and second-tier cities, or due to the delayed pace of supply under the new policy of dual concentration of land, the company did not disclose new projects in the first quarter. By the end of 2020, the company's land reserve has a saleable value of about 246 billion yuan, with a planned sales volume of 100 billion in 21 years, a year-on-year growth rate of 44%, and the annual sales target completion rate of 13% during the period. We expect that the company will further speed up the de-chemical process and practice its internal skills to cross the threshold of hundreds of billions of dollars.

The background of central enterprises and the blessing of commercial real estate have significant financing advantages.

At the end of the period, the company's net debt ratio was 85.4%, compared with-0.9 pct at the end of 20 years, 194.1% for monetary funds / short-term interest-bearing liabilities, compared with + 21.2 pct at the end of 20 years, and 72.0% after deducting accounts received in advance, compared with + 0.2pct at the end of 20 years. Based on the "three red lines" standard, the company belongs to the orange file. In January, the company issued 2 billion ABS, interest rate of 4.13%. In April, 1.5 billion votes were issued with an interest rate of 3.73%. With the background of central enterprises and commercial real estate, the company's financing cost advantage was highlighted.

Commercial brand and financing advantages to maintain the "overweight" rating we maintain 21-23 EPS of 0.36,0.43 and 0.49 yuan expected, reference comparable company in 21 years 9.4 times PE valuation (Wind consistent expectations), the company as a central enterprise in intensive commercial real estate, significant economies of scale, brand and financing advantages, this year to hundreds of billions, a positive attitude. We maintain the company's 2021 12 times PE valuation, the target price of 4.32 yuan, maintain the "overweight" rating.

Risk tips: declining sales in the industry; low expectations of the company's de-marketing speed; and fierce competition in commercial real estate.