Core views:

1. Sales performance has improved. The results of intensive cultivation in the Yangtze River Delta region have been remarkable. In January-June 2021, Yuzhou Group completed contract sales of 52.71 billion yuan, up 23% from the same period in 2020, and achieved 47.9% of the annual target. The results of deepening the Yangtze River Delta were remarkable, and its share of sales performance increased further by 3 percentage points to 65%.

The regional structure of saleable value in the second half of the year was relatively good. Referring to its removal rate of nearly 60% in 2020, it is expected that there will not be much pressure to achieve the 2021 sales target.

2. Property sales revenue increased markedly, and the net profit margin turned positive

In the first half of 2021, Yuzhou Group's revenue was 12.01 billion yuan, a sharp increase of 495% from the same period in 2020 after the reclassification. The increase in confirmed revenue from property sales was mainly due to an increase in the total floor area of the properties delivered. At the same time, sales costs also increased in the first half of 2021, but the margin was lower than revenue. As a result, Yuzhou Group's gross profit margin and net profit margin performance in 2021 increased significantly compared to the same period in 2020, from 2.3% and -11.3% to 20.1% and 10.0% respectively.

3. The “three red line” indicators have all improved. Overall financing costs are stable. Yuzhou Group's net debt ratio is 80.4%, the balance ratio after excluding advance payments is 74.0%, and the short-term cash debt ratio is 1.9 times. Compared with the same period in 2020, it decreased 5.4 percentage points, 3.9 percentage points and an increase of 0.2 times, respectively. Although the investment ratio for the first half of 2021 was low, the investment ratio for 2020H1 and 2020 was over 40%. The financing cost is 7.13%, which has remained stable in recent years.