Main points of investment:
Successfully achieved the sales target in 19 years. In 2019, the company's contract sales reached 141.3 billion yuan, an increase of 15.9% over the same period last year, successfully achieving the annual target of 140 billion yuan set at the beginning of the year. The contract floor area is 6.55 million square meters, an increase of 16.42% over the same period last year, with an average sales price of 21583 yuan per square meter. From the perspective of sales geographical distribution, the main sales cities of the company in 2019 are Hangzhou (48.62 billion yuan, accounting for 34.41%), Fuzhou (18.47 billion yuan, accounting for 13.07%) and Nanjing (16.2 billion yuan, 11.46%). The company continues to maintain its leading edge in Hangzhou and Fuzhou, ranking fourth in terms of equity sales in Hangzhou in 2019 and No. 1 in Fuzhou according to Kerry Statistics.
The gross profit margin improved and the net debt ratio decreased significantly. The company's operating income in 2019 was about 51.5 billion yuan, an increase of 49.75 percent over the same period last year, and its net profit was 5.9 billion yuan, an increase of 69.78 percent over the same period last year. The company's gross margin rose to 24.24% from 23.47% in 2018, an increase of 0.77 percentage points. The net interest rate of homing fell slightly to 6.13% from 6.26% in 2018, a drop of 0.13 percentage points. The company achieved the goal of reducing leverage while the overall debt scale remained stable, the net debt ratio fell from 105% in 2018 to 70% in 2019, and the financial structure improved significantly.
Accounts received in advance support future income growth. In 2019, the company's total assets reached 214.2 billion yuan, an increase of 5.29% over the same period last year, and its net assets were 16.4 billion yuan, an increase of 28.62% over the same period last year. By the end of 2019, the company's paper cash was about 34.3 billion yuan, an increase of 37.2% over the same period last year. By the end of 2019, the company received about 60 billion yuan in advance, which is 1.17 times of 2019's income, providing a strong support for the follow-up growth of operating income.
Deep ploughing of 44 cities in 9 major urban agglomerations, with sufficient land reserves. The company continues to deepen its "1100 N" in 2019.
Layout, to create the integration of three provinces and one city around Hangzhou Bay, ploughing a total of 44 cities in the country's nine major urban agglomerations (the Yangtze River Delta, the west bank of the Taiwan Strait, the middle reaches of the Yangtze River, the Central Plains, Chengdu and Chongqing, the Dawan area, Beijing-Tianjin-Hebei, Shandong Peninsula and northwest). In 2019, the Group added 46 new land projects, the total construction area of the new land reserve is about 7.3 million square meters, and the cost of equity land is about 16.3 billion yuan. By the end of 2019, the company has a total of 200 projects, with a total land reserve of 2700 million square meters, which is 4.1 times the sales area of the company in 2019.
Investment advice: "better than the big market". We predict that the company's EPS in 2020 will be 2.28 yuan per share. With reference to the comparable company valuation, we give the company 4-5 times PE valuation in 2020, corresponding to the market capitalization of HK $178-22.2 billion, the corresponding reasonable value range of HK $10.35-12.94, and the corresponding PEG of HK $0.18-0.22. (unless otherwise noted in this article, they are all denominated in RMB, HK $1 = RMB 0.88)
Risk hint: due to the impact of the epidemic, the company opened and completed and sold later than expected.