Net profit attributable to the core increased by 29%
In the first half of 2021, the company achieved operating income of 30.07 billion yuan, an increase of 35% over the previous year; achieved net profit of 3.0 billion yuan, an increase of 8% over the previous year; and achieved core net profit of 3.93 billion yuan, an increase of 29% over the previous year. The Board recommended declaring an interim dividend of HK4 cents per share.
Sales increased 77%, further deepening the Greater Bay Area
In the first half of 2021, the company achieved a cumulative equity sales area of 380.6 million square meters, an increase of 80% over the previous year; the cumulative equity sales amount was 63.85 billion yuan, an increase of 77% over the previous year, of which 51% of the sales amount came from the Greater Bay Area. In the first half of 2021, the company added 15 new land projects, with an equity construction area of 2.46 million square meters, equivalent to 103.1 billion yuan, of which projects in the Greater Bay Area accounted for 63%; the company successfully transformed 3 urban renewal projects, corresponding to a saleable area of 1.13 million square meters, with a saleable value of 72.7 billion yuan; at the same time, the company added 15 urban renewal projects not included in land storage. By the end of the first half of 2021, the company had 31.14 million square meters of land storage, equivalent to about 73.47 billion yuan, accounting for 67% of equity. Of these, about 54% were in first-tier cities, about 76% were in the Greater Bay Area, and urban renewal projects accounted for about 47%.
Financial optimization, return to the “green file”
By the end of the first half of 2021, the company's net debt ratio was 93.7%, down 2.4 percentage points from the end of the previous year; the balance ratio after excluding pre-collected accounts was 69.9%, down 0.2 percentage points from the end of the previous year; the short-term solvency guarantee multiplier — monetary funds/ (short-term loans plus non-current liabilities due within one year) was 1.53. Financial indicators continued to be significantly optimized. All three red line indicators met the standards, returning to the “green range”. In 2020, the company's domestic financing costs fell 60 basis points to 7.4% year-on-year, and the financing costs of additional overseas loans fell 202 basis points to 9.1%, and financing costs continued to decline. The company's debt structure was optimized. In the first half of 2021, the company's total debt for more than 2 years accounted for 57%, an increase of 10pct over the same period last year.
Urban renewal continues to gain strength
In addition to the company's total land storage of 31.14 million square meters, by the end of the first half of 2021, the company had 213 urban renewal projects not included in land storage, covering an area of 53.7 million square meters. The corresponding cough area was estimated to reach 110 million square meters. Among them, the Greater Bay Area project reserves accounted for more than 99%. Shenzhen, Guangzhou, Dongguan and Zhongshan are expected to account for 29%, 41%, 6%, and 14% of the total saleable area respectively.
Sales growth is high, finances are healthier, maintaining strong sales of “buy” rating companies, continuous significant financial optimization, and abundant Bay Area reform resources will guarantee the company's future sales and development. The company's net profit for 2021 and 2022 is estimated to be 6.54 billion yuan and 7.84 billion yuan respectively. The EPS corresponding to the latest share capital is 0.93 and 1.12 yuan respectively, and the PE corresponding to the latest stock price is 3.3 and 2.8 X respectively, maintaining the “buy” rating.
risks
The company's sales and settlement fell short of expectations, profitability fell short of expectations, urban renewal progress fell short of expectations, rising financial costs exceeded expectations, or market regulation exceeded expectations.