Recommended logic: 1) the company carries on the diversified industrial layout, taking the medical beauty industry as the core strategic transformation direction; 2) the company is good at using the capital market platform and medical beauty industry fund to integrate high-quality medical beauty industry resources, and set up 5 billion industrial funds in the early stage. accelerate the landing of medical and beauty projects and expand the medical and beauty system and strategic layout in Jiangsu and Asia. 3) the company focuses on the core cities, and the real estate business continues to provide sufficient financial support for the company's development.
Performance summary: in 2020, the company achieved an operating income of 4.3 billion yuan (+ 9%) and a net profit of 1 billion yuan (- 16%). In terms of revenue structure, the real estate industry, construction industry, hotel industry, cultural creativity and other industries accounted for 94.2%, 1.5%, 2.3%, 2.0%, respectively. The company's profitability ranks in the upper reaches of the industry. 2021Q1's gross profit margin and net profit margin have risen sharply, 4.6pp to 66.6% from the end of 2020, and 10.4pp to 34.1% from the end of 2020. The financial position is sound, and the debt situation continues to be low. The asset-liability ratio excluding pre-received assets in 2020 is 42%, and the net debt ratio is 23%. Financing costs remain at a low level in the industry, and the average financing cost of companies in 2020 is only 4.35-6.5%. 2021Q1 achieved double growth in revenue and profit, with revenue and home net profit increasing by 2% and 4% respectively compared with the same period in 2020, maintaining high profitability while maintaining steady growth in operating income.
Medical beauty business: abundant funds to help expand, to create a high-end medical beauty leader. In 2016, the company made a strong cut into the medical and beauty industry and jointly funded the establishment of the Zhenjiang SUNING Global Medical and Beauty Industry Fund with a registered capital of 5 billion yuan and the company's shareholding ratio of 45%. In the same year, the fund acquired four medical and beauty hospitals. distributed in Beijing, Tangshan, Shijiazhuang and Wuxi market. In 2017, the company completed the acquisition of 90% equity in Shanghai Tianda Medical Beauty Hospital Co., Ltd. Thanks to the high profitability and sustained and steady development of the main real estate business, the company has sufficient financial support for business transformation and development. the registered capital of the medical and beauty industry fund set up in the previous period has reached 5 billion yuan, and the company's competitiveness in the medical and beauty industry is prominent.
Real estate business: sustained and steady development, focusing on core cities. In 2020, the company's total construction area of land storage is 2.38 million square meters, of which the total construction area located in Nanjing accounts for 69%. In the past five years, the company's land acquisition strategy is relatively conservative, benefiting from the company's active land acquisition strategy in its early years, the company has lower land acquisition costs and sufficient land reserves, and only added 439,000 square meters of land in Xi'an in 2020. The company has always focused on the Nanjing market, accounting for more than 70% of the settlement amount of real estate sales in Nanjing in the past five years. The settlement amount of real estate sales in 2020 was 3.79 billion yuan, an increase of 7.7 percent over the same period last year, of which Nanjing accounted for 91 percent, reaching 3.45 billion yuan.
Profit forecast and investment advice. It is estimated that the company's net profit from 2021 to 2023 will be 1.85 trillion yuan, with a growth rate of 37.8%, 29.2%, 20.3%, 0.47, 0.61, 0.73 respectively. In view of the company's abundant funds, stable profits in the real estate business and the rapid development of the medical and beauty business, it was given a "hold" rating for the first time.
Risk tips: medical and beauty business development is not as expected, industry policy regulation risk and so on.