Event one. The company publishes its 2019 annual report. During the reporting period, the company achieved a total operating income of 13.282 billion yuan, down 31.13% from the same period last year, and the net profit belonging to shareholders of listed companies was 2.34 billion yuan, down 9.73% from the same period last year. The company plans to pay a cash dividend of 1.38 yuan (including tax) to all shareholders for every 10 shares in 2019.
Event two. The company publishes its quarterly report for 2020. During the reporting period, the company's total operating income was 1.325 billion yuan, down 80.44% from the same period last year; the net profit belonging to shareholders of listed companies was 121 million yuan, down 90.78% from the same period last year.
In 2019, the number of projects with the conditions for carrying forward operating income decreased, resulting in a 31.13% decrease in revenue and 9.73% in net profit. In the first quarter of 2020, the number of projects qualified to carry forward operating income decreased, resulting in a decrease of 80.44% in revenue and 90.78% in net profit. According to the company's 2019 annual report: (1) in 2019, the company achieved a total revenue of 13.282 billion yuan. Of this total, the revenue from development products was 11.971 billion yuan, down 33.39% from the same period last year, and the income from leasing development products was 620 million yuan, down 4.62% from the same period last year. (2) in 2019, the company successfully won the B2-01 site of unit N091104 in Xinjiangwan Community, Yangpu District through open market auction, achieving a "zero breakthrough" in market-oriented land acquisition by Chinese enterprises in the past seven years. During the reporting period, the company established a joint venture with Hong Kong Shun Tak Group to complete the contract for the 50% equity acquisition project of the overseas Chinese Town Group Suhewan project. (3) in 2019, the company signed a total of 9.5 billion yuan in new housing sales, with a total signed area of 221500 square meters, ranking among the top 50 on the list of equity sales of real estate enterprises in Shanghai. In 2019, the company launched four new real estate sales projects, of which: China Enterprise Binjiang Financial Center achieved sales registration and record, achieving the target of that year; Binjiang Yuefu project achieved about 90% of sales within one and a half months; Shanghui Haoting achieved about 83% of sales within three and a half months. In view of the inventory value of Chinese enterprises, the company adopted a variety of ways, such as bulk transactions and circle breakthroughs, to realize the sales of the whole building of impression Chuncheng A, the final liquidation of Zhongxing Honglu, Qingshuiwan and Xiangdi Yiyi, and the removal of unsalable parking spaces in Gubei Extractive Court. At the same time, complete the signing of the property rights transaction contract for the transfer of room D on the fifth floor of the commercial real estate Gangtai Plaza.
Investment advice. Transition to real estate development and integrated service providers, "better than the market" rating. The company is the main platform for market-oriented real estate development under Shanghai Real Estate Group. The company focuses on the development and operation of the three product lines of housing, commercial offices and stock assets, and lays out the areas around Shanghai and the Yangtze River Delta while ploughing the Shanghai market, radiating key cities such as Kunshan, Zhenjiang, Suzhou, Hangzhou, Jiangyin, Wuxi and Hefei. We estimate that the EPS of the company in 2020 and 2021 is 0.49 yuan and 0.61 yuan respectively. Considering the gradual results of the company's transformation, the company is given 9-11 times dynamic PE in 2020, and the corresponding reasonable value range is 4.41-5.39 yuan, maintaining the company's "better than the market" rating.
Risk hint: the company faces two major risks: interest rate hike and policy regulation.