According to the company's semi-annual report of 2023, the total operating income in the first half of the year was 36.86 billion yuan, an increase of 31.1% over the same period last year, and the net profit attributed to the parent company was 1.53 billion yuan, down 22.2% from the same period last year.
Revenue grew steadily in the first half of the year, and profit margins remained under pressure. In the first half of 2023, the company's operating income grew steadily by 31.1%, of which the carry-over income from real estate projects was 31.14 billion yuan, up 33.9% from the same period last year. The company's home net profit in the first half of the year decreased by 22.2% compared with the same period last year, mainly due to: (1) the gross profit margin of each main business declined, of which the gross profit margin of real estate development fell 6.3 percentage points to 14.9% year on year, affected by the downward market. The increase in the scale of high-cost projects led to continued pressure on profitability. (2) Investment income decreased by 68.6% year-on-year, which may be affected by the carry-over rhythm and profit margin of non-consolidated items; (3) sales expenses increased by 12.5% year-on-year, which is related to the company's increased marketing efforts and increased promotion service fees; (4) the financial expenses increased by 9.6% year-on-year, mainly due to the decrease in interest income.
Sales show resilience, and high-energy cities maintain a certain degree of investment. The company has a high-quality distribution of marketable resources, and in the first half of the year, it actively grasped the sales elasticity brought about by the market recovery, demonstrated good business resilience, and achieved a total signed area of 4.711 million parties, an increase of 12.4% over the same period last year, and a cumulative contract amount of 85.82 billion yuan, down 14.7% from the same period last year. The company adopts the investment principle of fixed investment based on sales, and further strengthens the investment layout in high-level cities. In the first half of the year, the company obtained high-quality soil storage resources in Shanghai, Hangzhou, Nanjing, Xi'an, Dongguan and other cities. The total investment of the newly acquired project is about 11.9 billion yuan, and the investment intensity is 13.9%. By the end of the period, the company had a total land reserve of 4878 million square meters, of which first-and second-tier cities accounted for about 73%, providing the basis for the company's subsequent sales performance.
The scale of debt and financing costs remain at a reasonable level, and the company's operation is safe and stable. The company attaches importance to cash flow management, and continues to ensure the safety and stability of the company's operation through project cooperation, widening financing channels and maintaining a good debt structure and capital position. It holds 46.08 billion yuan of monetary funds as of the end of the reporting period. The scale of corporate liabilities and financing costs remain at a reasonable level. At the end of the reporting period, the balance of interest-bearing liabilities of the company was 109.6 billion yuan, the asset-liability ratio excluding prepaid payments was 62.9%, the net debt ratio was 53.5%, and the weighted average cost of debt financing was 4.39%.
Maintain the buy rating and adjust the target price to 9.73 yuan. According to the results of the China report, we have adjusted the forecasts of the company's business gross profit margin, investment income, sales expense rate, financial expenses, etc., and the adjusted EPS forecast for 2023-2025 is 1.39pm 1.41max 1.53 yuan (the original forecast for 2023-2025 is 1.47pm 1.53pm 1.63 yuan). With reference to the comparable company, the company is valued at 7 times PE for 23 years, corresponding to the target price of 9.73 yuan.
Risk tip: sales recovery is not as good as expected. The policy was looser than expected. The credit risk of the industry has further spread.