Investment Summary:
The core investment point of this report is the inflection point of expected profitability. Through a survey of the company's existing 117 projects, we found that more than 70 items sold at a price higher than the property valuation report (July 20). The adjusted gross profit margin of 77 items on sale can reach 33.8%, an increase of 12 percentage points from the 21.8% gross margin expected in the valuation report of 117 existing projects. With the gradual settlement of the project, the overall gross profit margin of the company will be increased.
Sales are about to break through hundreds of billions, and the average sales price has increased in varying degrees. Sales in 2020 totaled 97.201 billion yuan, an increase of 9.39 percent over the same period last year, and the average price growth rate rose from-14 percent in 2019 to 8 percent in 2020.
The average price from February to April 2021 increased by 27%, 1% and 18%, respectively, compared with the same period last year.
The cost side maintains stability. From 2017 to 2020.4, the average land acquisition costs delivered by Jinhui Holdings were 2141 yuan, 2692 yuan, 5120 yuan and 5357 yuan respectively. According to the prospectus, the average cycle from acquisition to completion of the past 89 projects is 37 months, with a median of 33 months. As a result, it is concluded that the average land acquisition cost of the above delivery basically corresponds to the average price of newly added land from 2014 to 2017.4. The average price of new land in 2020 was 5126 yuan, which was similar to that in 2017, and the cost side remained stable.
The three red lines are up to standard, the annual growth rate of interest-bearing liabilities is capped at 15%, and there is plenty of room for financial operation.
By the end of 2020, the company had a net debt ratio of 75.3%, a cash short-term loan ratio of 1.4%, and an asset-liability ratio of 69% excluding pre-sale payments, all of which met the green requirements of the "three red lines" policy.
Minority shareholders' interests and cash have soared by more than $10 billion. Cash rose 98 per cent to 26.59 billion yuan in 2020 compared with the same period last year.
Financing costs have fallen steadily. The weighted average financing rates from 2018 to 2020 were 7.65%, 7.76% and 7.47%, respectively.
The land reserve is sufficient, according to the settlement area in 2020, enough for 10 years of development demand. The total construction area of the land reserve is 30.73 million square meters, the land storage area of rights and interests is 2405 million square meters, the carry-over area in 2020 is 256 million square meters, and the land storage / carry-over area covers 9.4 percent of Prida, of which 94.7 percent is located in second-tier and core third-tier cities.
There are plenty of soil reserves in the areas with high average sales price. The average sales prices of the Yangtze River Delta and Northwest China in 2020 were 27574 yuan and 14376 yuan respectively, with land reserves accounting for 13% and 30% respectively. According to the settlement area in 2020, the land storage / delivery area in the Yangtze River Delta and northwest is about 20 times, which has enough support for the company's high settlement average price in the future.
The land is stable and the cost is low. The average price of land storage increased by 5126 yuan per square meter in 2020, accounting for 36% of the average sales price of the current period, and the ratio of land sales area is 0.62. In the first quarter of 2021, the construction area of land acquisition rights and interests is 5421 million square meters, ranking 34th.
The average price is 6545 yuan / ping, accounting for 40.84% of the average sales price in the current period.
The income is carried forward quickly, and the multiple of coverage is 2.01. More than 80% can sell less than 200,000 square meters of construction area, small project area and high turnover. The total revenue was 34.88 billion yuan, an increase of 34.3% over the same period last year. The carry-over area increased by 43.6% year-on-year to 255.65 square meters, and the coverage multiple of pre-received / carried-over income was 2.01.
The core team has a lot of experience in the industry.
Chairman Lin Dingqiang has more than 26 years of experience in the real estate industry.
Lin Yu, son of Lin Dingqiang, will bring innovative ideas to the company as CEO. Formally joined Jinhui in 2011, joined the group headquarters in 2015, and accumulated real estate work experience over the past 10 years.
Investment suggestion: we expect the company's earnings per share in 2021 to 2023 to be 1.04,1.44,1.90 yuan respectively, which is 3.84,2.77 and 2.1times relative to the current stock price PE. The NAV per share is 9 yuan (HK $10.8), and the current price is 57.2% below the discount. The company's gross margin is expected to show an inflection point, covering the "buy" rating for the first time.
Risk tips: sales less than expected risk, real estate policy regulation risk, epidemic repeated risk.
