This report is read as follows:
The company's performance is in line with expectations, and profit margins fall further with the industry. The company's real estate settlement is stable, life services and real estate + business to achieve high growth. As the industry financing policy gradually ushered in improvement, the company's operating risk has been reduced.
Main points of investment:
Maintain the "increase" rating, maintain the target price of 5.36 yuan. Affected by the declining sales of the industry and the progress of settlement, we downgraded the company's performance growth to 5% and 9% (originally 18% and 16%) in 2022-2023, and is expected to grow by 1% in 2024. We reduce the company's EPS in 2022 to 0.71 and 0.77 yuan in 2023 (originally 1.57,1.83 yuan), and estimate that the EPS in 2024 will be 0.78 yuan. Maintain the target price of 5.36 yuan and maintain the overweight rating.
The company's real estate settlement is stable, life services and real estate + business to achieve a higher growth rate. In 2021, the company achieved revenue of 112.3 billion yuan, an increase of 28.1%. Of this total, real estate development reached 103.5 billion yuan, up 27.0 percent; life services reached 3.82 billion yuan, up 71.4 percent; and other businesses dominated by real estate + business achieved revenue of 4.98 billion yuan, up 60.1 percent. In 2022, Q1 achieved revenue of 12.7 billion yuan, an increase of 2.2% over the same period last year, and settlement slowed down.
The company's performance is in line with expectations, profit margins are falling with the industry, and short-term performance is under pressure. In 2021, the company's gross profit margin and net profit rate were 17.2% and 3.2% respectively, down 5.9% and 4.8pcts respectively compared with 2020. Mainly due to the influence of the market, the inventory depreciation of 2.16 billion yuan was set aside, while the net investment income also decreased to a certain extent. In addition, the profit and loss ratio of minority shareholders increased to 46% to dilute the profits of the parent company shareholders. Q1 company's profit margin fell further in 2022, with gross profit margin and net profit margin falling to 10.7% and-2.3% respectively. Q1 suffered a loss in 2022, and its short-term performance was under pressure.
As the industry financing policy gradually ushered in the improvement, the company's operating risk gradually reduced. As of 2022 Q1, the company's short-term cash-to-debt ratio of less than 1 in the three red lines is not up to standard, and the short-term cash flow is tight. With the recent industry policy gradually ushered in improvement, the company is expected to further reduce operational risk.
Risk hint: industry regulation and control is further tightened, and the decline in industry demand is greater than expected.