Event: on April 9, 2021, the company released the 2020 annual report that the company achieved an operating income of 1.3624 billion in 2020, a year-on-year increase of 23.55%, and a net profit of 50.8674 million yuan,-91.59%.

Revenue and sales maintained growth, holding property income was basically the same as last year, the company achieved operating income of 1.362 billion in 2020, + 23.55% year-on-year, home net profit of 51 million, year-on-year-91.59%. Revenue rose year-on-year, while homing net profit fell sharply because of 1.251 billion net investment income from the disposal of major projects (70 per cent stake in Xianghe Wantong) in the same period last year, with a profit of 4. 5 per cent EBITDA in 2020.

900 million, compared with a loss of 76 million in 2019.

After entering the transition period, the company no longer carries on the development of new real estate projects, and the real estate business is mainly late sale. The company achieved commercial housing sales of 1.043 billion in 2020 (827 million in 2019), with a sales area of 519,000 square meters in 2019.

Sales increased compared with 2019. In terms of commercial real estate rental, the company achieved a rental area of 11.12 million square meters in 2020 (11.88 million square meters in 2019) and a contract rent of 249 million yuan (254 million in 2019). The overall office vacancy rate affected by the epidemic increased in 2020, and the overall income of the company's self-owned property was the same as that of last year, reflecting a sound and excellent operating ability.

The strategic transformation continues to deepen, signing a number of framework agreements

In June 2020, Mei Zhiming, co-founder and CEO of GLP Group, served as the director and director of the Strategy Committee of Wantong Development. By the end of the reporting period, the company had completed the establishment of three joint ventures with GLP. It is proposed to cooperate in the areas of urban renewal, industrial-urban integration, technology industry incubation and financial capital.

In September 2020, the company signed a strategic cooperation framework agreement with Shangtang Technology, which will carry out strategic cooperation in many fields, such as the landing of artificial intelligence application scenarios, artificial intelligence industry clusters and smart cities.

In October 2020, the company reached a framework cooperation agreement with State Grid Integrated Energy Service Group Co., Ltd., a wholly-owned subsidiary of State Grid Co., Ltd., the two sides will carry out comprehensive cooperation in the comprehensive energy management of the city, including large-scale complexes, industrial parks, efficient energy stations with ports in urban residential areas, distributed photovoltaic, building energy conservation and other areas to carry out strategic cooperation layout.

Financial health, light asset transformation, no burden

According to the company's 2020 annual report, the company has 2.544 billion monetary funds, 126 million interest-bearing liabilities due within one year, and 2.193 billion long-term loans. Cash can fully cover interest-bearing debts, with an asset-liability ratio of only 34.34%. In terms of cash flow, the company received 1.355 billion of cash in selling goods and providing services in 2020, and the net cash flow of operating activities was 12.

In 2.4 billion, the overall financial position and cash flow remained healthy, leaving plenty of room for transformation.

Investment suggestion: the company continues to implement the new strategic goal of "New Wantong, New Empowerment and New Development" put forward in 2020, making continuous efforts in the digital transformation, reconstructing the organizational structure internally, empowering the transformation, continuously contacting with the digital company externally, signing cooperation agreements and forming alliances to lay a solid foundation for the subsequent transformation. Due to the lack of project resources that the company can carry forward at this stage, the transformation business project is in the incubation period, so the company's EPS in 2021-2022 will be reduced to 0.08,0.09 yuan, and 2023 EPS0.11 yuan will be given. Considering that the company has stopped the full transformation of new real estate project development, self-owned commercial real estate rent is sufficient to cover loan interest, overall financial health, and basically completed the diversified business development layout of "urban renewal + industrial consumption upgrading". We are optimistic that the company will maintain its "buy" rating with the support of strong financial strength and the background of excellent executives.

Risk hint: there is great uncertainty in the company's business transformation, and the future investment income may be lower than expected; the company's real estate project sales and settlement are lower than expected, and commercial proprietary operating income is not as expected.