22H1 deducted non-homing net profit from a loss, downgraded to "overweight" rating company released semi-annual report on August 29, in line with the previous forecast: 22H1 realized revenue of 16.4 billion yuan, year-on-year-29%; realized return net profit of 110 million yuan,-93%; deducted non-homing net profit loss of 210 million yuan. Taking into account the impact of the epidemic and the real estate downturn, we reduced the company's revenue and gross profit margin, reducing the company's 22-24 year EPS to 0.37 0.40 pounds 0.43 yuan (previous value 0.57 pounds 0.69 pounds 0.84 yuan). Due to the large fluctuations in the tourism sector 2022E PE under the impact of the epidemic, we use 2023e PE as the company's valuation reference, which can be compared to the company's average 2023e PE of 12 times (Wind consensus expectation). Taking into account the company's leading position in cultural travel real estate, the target price was lowered to RMB6.00 (previous value of RMB9.12, based on 16x 2022E PE), downgraded to "overweight" rating.
Epidemic situation, profit decline, carry-over structure and other factors led to the decline of 22H1 performance compared with the same period last year. Due to the adverse impact of the epidemic on travel operations and real estate delivery, 22H1 revenue declined.
The year-on-year decline in net profit is even greater, mainly due to: 1. The decline in industry profit margin and the decrease in Shenzhen high gross margin projects, resulting in real estate business gross profit margin year-on-year-48.7pct to 24.4%, dragging down the company's overall gross profit margin year-on-year-8.6pct to 24.7%. 2, the carry-over project equity ratio is low, resulting in minority shareholders' profit and loss ratio from + 52.9pct to 85.9% year-on-year. 3. The decrease in revenue leads to the report caliber sales management expense rate from + 3.6pct to 12.3% compared with the same period last year. 22H1 deducted non-return net profit and suffered a loss, mainly due to the exclusion of 390 million yuan in government subsidies.
Real estate business: sales of land slow, financing to maintain advantages
Affected by the decline in real estate, the company's sales area from January to July was-42% to 1.48 million square meters, and the sales amount was-37% to 31.4 billion yuan. The decline in rebate superimposed market judgment is more cautious, the company's land acquisition strength has been greatly reduced, the total land price of 22H1 is-88% to 2.4 billion yuan compared with the same period last year, the amount of land acquisition intensity is-37.6pct to 8.9% compared with the same period last year, and the equity ratio is 53.6%. As of 22H1, the company's remaining developable capacity is 17.98 million square meters, and the soil storage is still abundant. Relying on the background of central enterprises, the company maintained its financing advantage. 22H1 increased its financing by 22.5 billion yuan, and the average financing cost was 4.36% higher than that at the beginning of the year-10bp.
Cultural travel business: push through the old and bring forth the new, passenger traffic dropped by 6% compared with the same period last year
22H1 overcame the impact of the epidemic and opened new cultural and tourism projects such as Chengdu Longquanyi Happy Garden and Xiangyang Qifeng Valley, receiving a total of 26.777 million tourists, down 6% from the same period last year. The company actively promotes the high-quality development of literature and travel business through IP and festival empowerment, science and technology assistance and other ways. As of 22H1, the company's ongoing cultural and tourism projects include 32 scenic spots, 29 hotels, 1 travel agency, 8 open tourism areas and 1 tourism performing arts.
Risk tips: epidemic development uncertainty, real estate policy and industry downside risks, profitability downside risks.