Main points of investment
Our point of view: the company's land ownership ratio has rebounded since 2019, and the amount of equity sales is expected to maintain a steady growth in the next two years. The company's financial situation continued to improve, with average financing costs falling by 1 percentage point year-on-year in 2020, net debt ratio falling below 70%, and short-term debt ratio continuing to decline (down 5.1% from the same period last year). The company's current share price is 7 times the 2020 PE and the current dividend yield is 2.9%.
The core net profit increased by 18.9% over the same period last year, and the performance was in line with expectations: the company's operating income in 2020 was 36.1 billion yuan (the same below), an increase of 11.0% over the same period last year; the core net profit was 3.3 billion yuan, an increase of 18.9% over the same period last year. The gross profit margin was 19.1%, down 0.9 percentage points from the same period last year; the core net profit margin was 9.1%, up 0.6 percentage points from the same period last year. For the whole year, the dividend per share is HK15 cents, and the total dividend for the whole year accounts for 22% of the core net profit.
Steady growth in sales: the company achieved sales of 141.9 billion yuan in 2020, an increase of 8.6% over the same period last year, a sales area of 8.9 million square meters, an increase of 5.5% over the same period last year, and an average sales price of 15949 yuan per square meter, an increase of 3.0% over the same period last year. The amount of sales is divided by region, with the Yangtze River Delta, Hercynian, the west, the Bohai Rim, the Pearl River Delta and the central part accounting for 39%, 33%, 7%, 10%, 2% and 10%, respectively. In 2021, the company's sales target is 150 billion yuan, an increase of 6% over the same period last year. The salable value for the whole year exceeds 250 billion yuan, and the corresponding removal rate target is 60%.
The proportion of land rights and interests is 70%: the company added 46 new land projects in 2020, with a new land storage of 7.14 million square meters, and the proportion of rights and interests (by area) is 70%. By the end of the year, the company's total land storage area was 2845 million square meters, an increase of 8.8% over the same period last year, and the proportion of total land storage rights and interests (by area) was 58%. The overall average land cost is 4919 yuan per square meter, accounting for 31% of the average sales price.
The proportion of short-term debt fell further: the company's net debt ratio was 64.7% at the end of 2020, down 10.5 percentage points from a year earlier, and the average financing cost at the end of the year was 6.5%, down 1.0 percentage points from a year earlier. At the end of the year, the company's paper cash was 43 billion yuan, and the total interest-bearing liability was 67.3 billion yuan, of which short-term debt accounted for 29%, a further decrease of 5.2% compared with the same period last year, and domestic debt accounted for 62%. The cash-to-debt ratio is 1.8, and the asset-liability ratio excluding advance receipts is 77%, which is in the yellow file of the three red lines.
Risk tips: macroeconomic growth slows, industry restrictions tighten, liquidity tightens, commercial housing sales fall short of expectations, and RMB depreciates.