Events. The company publishes its 2019 semi-annual report. During the reporting period, the company realized operating income of 9.141 billion yuan, an increase of 19.22% over the same period last year; net profit belonging to shareholders of listed companies was 1.672 billion yuan, an increase of 100.56 per cent over the same period last year; and basic earnings per share was 0.27 yuan.
In the first half of 2019, driven by the increase in projects carrying forward operating income, the company's revenue increased by 19.22%. During the same period, the increase in gross profit margin of carry-over projects led to a substantial increase in net profit of 100.56%.
In the second quarter of 2019, the company started 1 new project, no newly completed projects and no new project reserves. At present, the company has 31 main development projects. According to the announcement of the company's operating data on August 23, the company started one new project (Jilin Zhongxing headquarters Base Project) in the second quarter, with no newly completed projects and no new project reserves. At present, the company has 31 main development projects, concentrated in Shanghai, Jiangsu Province, Zhejiang Province, Anhui Province, Jilin Province, including Shanghui Haoting, impression Chuncheng, Wuxi Yanwei Villa, Hangzhou China Enterprise Genshan Mansion and Jilin Zhongxing headquarters Base Project. The company signed a contract area of about 51000 square meters in the second quarter of 2019 (April-June), with a total contract area of 135700 square meters in 2019; the contract amount in the second quarter was about 1.533 billion yuan, and the total contract amount in 2019 was about 6.634 billion yuan. The rental area of the company is about 327300 square meters at the end of the second quarter of 2019, and the rental income in the second quarter is about 156 million yuan.
Investment advice. Strive to become an influential real estate development enterprise in Shanghai, with a rating of "better than the market". The company focuses on residential, commercial and stock assets three business lines, effectively enhance profitability and industry competitiveness. At present, the company's development projects are mainly concentrated in Shanghai, radiation Kunshan, Zhenjiang, Suzhou, Hangzhou, Jiangyin, Wuxi and other key cities in the Yangtze River Delta. In the first half of 2019, the company signed a contract of 6.634 billion yuan, an increase of 155.22% over the same period last year. We estimate that the EPS of the company in 2019 and 2020 is 0.50 yuan and 0.59 yuan respectively. We give the company a dynamic PE of 11-14 times in 2019, with a reasonable value range of 5.50-7.00 yuan, maintaining the company's "better than the market" rating.
Risk hint: the company faces two major risks: interest rate hike and policy regulation.