Revenue grew steadily, and the balance and liability structure remained stable. In the first half of 2024, the company achieved total operating income of 139.2 billion yuan, +1.6% year on year; gross profit margin of 16.0%, consistent with the full year level of 2023; net profit to mother of 7.4 billion yuan, compared to the same period of 2023; mainly due to the decline in settlement equity ratio; at the same time, the company continued to strengthen various expense controls, and the management expense ratio decreased by 0.15 percentage points over the same period in '23. As of the end of June 2024, the company's balance ratio after deducting advance payments was 65.67%, the net debt ratio was 66.18%, the short cash to debt ratio was 1.22, and the net cash flow from operating activities was -17.1 billion yuan.

The sales amount has steadily ranked first in the industry, and the market share has been rising steadily. In the first half of 2024, the company achieved a contract fee of 173.336 billion yuan, -26.81% over the same period; a contract area of 9.5425 million square meters; a sales equity ratio of 77%, an increase of 9 percentage points over 2008; and equity sales of about 133 billion yuan, a decrease of 17% over the same period in '23, which is lower than the full-caliber sales decline. In the first half of 2024, the company's market share increased 0.06 percentage points to 3.68% compared to the end of 2023, with 38 core cities increasing 0.3 percentage points to 7.1%. Meanwhile, sales contributions from 38 core cities increased by 2 percentage points year over year to 89%.

Make better incremental investments and enhance momentum for sustainable development. In the first half of 2024, the company took the opportunity to supplement land resources while ensuring that the pre-tax cost profit margin level of new projects did not decrease. A total of 12 projects were expanded, all located in 38 core cities, with a total floor area of 1.16 million square meters, an equity land price of 10.9 billion yuan, and a total land price of 12.6 billion yuan. At the same time, the company continues to step up efforts to remove inventory. The planned construction area of 1H24 land reserves is 71.4 million square meters, down 8% from the beginning of '24; the core 38 cities account for about 70% of the area reserves.

Financing advantages were highlighted, and a 9.5 billion yuan debt conversion plan was launched. In the first half of 2024, the company actively grasped the low-interest financing window and added 93.8 billion yuan in debt, of which 19.9 billion yuan was direct financing, accounting for 21% of the new financing; the average cost of additional financing decreased by 21BP to 2.93% compared to 2023. As of the end of June 2024, the company's total interest-bearing debt was $373.5 billion, and the comprehensive cost was reduced to 3.31%, down 25 BP from the beginning of '24.

By the end of June 2024, the company had achieved a cumulative return amount of 146.6 billion yuan, with a return rate of 84.6%; a cash balance of 146.4 billion yuan, accounting for more than 10% of total assets; in addition, the company's consolidated statement had sold funds to be returned 103.3 billion yuan (including sales tax), and the overall cash flow was reasonable and abundant. In August 2024, the company was approved to register 10 billion yuan corporate bonds and launched a 9.5 billion dollar convertible corporate bond program to specific targets, laying the foundation for further optimizing the debt structure.

Investment advice: Maintain an “better than the market” rating. Considering that the company's various businesses are solid and steady, actively promoting the majority shareholders' repurchases and increasing the cash dividend ratio, which reflects shareholders' confidence in the company's future development and recognition of long-term investment value, we gave the company a 2024 EPS of RMB 1.03, a 10-12 times PE valuation. The corresponding market value range was 123.2-147.8 billion yuan, and the corresponding reasonable value range was 10.29-12.35 yuan per share. Risk warning: 1) There is a downside risk in industry sales; 2) Market recovery falls short of expectations.