Stable profit margins drive the company's performance forward steadily. In the first half of the year, the company achieved operating income of 30.07 billion yuan, an increase of 34.8% over the same period last year, and a net profit of 3 billion yuan, an increase of 8.5% over the same period last year. The core net profit was 3.93 billion yuan, an increase of 28.9% over the same period last year. The improvement of the company's performance is mainly due to the increase in the scale of project carry-over and more refined management. the company has actively expanded the online platform of digital marketing and achieved remarkable results in reducing costs and increasing efficiency. In the first half of the year, the marketing expense rate was 2.52%, down 83 basis points from the same period last year. The management expense rate was 4.81%, down 87 basis points from the same period last year. In the first half of the year, the company achieved a gross profit margin of 30.9% and a net profit rate of 10.2%, down 2.9 percentage points and 0.4 percentage points respectively from the same period last year. Stable profit margins drive the company's performance forward steadily.

The sales value is abundant, and the annual sales target can be met. In the first half of the year, the company's sales grew strongly, realizing contract sales of 63.85 billion yuan, an increase of 77.2% over the same period last year, and a contract sales area of 380.

60,000 square meters, an increase of 80% over the same period last year. Among them, the confirmed sales amount was 27.67 billion yuan, an increase of 34% over the same period last year, and the confirmed average sales price was 19200 yuan, an increase of 1% over the same period last year. In terms of city level, the contract sales of first-tier / second-tier / third-tier cities account for 24%, 69%, 7%, respectively. The company's annual sales target for 2021 is 130 billion yuan, and 49% has been completed in the first half of the year. In the second half of the year, the company expects to have a sales value of 127 billion yuan, which is abundant, and the annual sales target is expected to be successfully completed.

The transformation of urban renewal is accelerated, and the soil reserves in the core areas are abundant. In the first half of the year, the company took a more cautious position in the open market, with a new equity construction area of 2.46 million square meters, down 12.1% from the same period last year. The size of the company's land reserve is 31.14 million square meters, and the corresponding value of the goods is 734.66 billion yuan. Among them, the land reserve in the Great Bay area is 19.23 million square meters, accounting for 61.8%. The company focuses on urban renewal and transformation, and has transformed a salable area of 112.5 square meters in the first half of the year, with a saleable value of 72.7 billion yuan. It is expected that in the second half of the year, the saleable area will be 1.552 million square meters, with a conversion value of 74.2 billion yuan. At present, the company has a total of 213 projects in the urban renewal section, covering an area of more than 53.7 million square meters. The rich reserve of urban renewal projects will support the continuous transformation of the company's future value.

The financial situation has been continuously optimized to meet the standards of green enterprises. The total loan volume of the company in the first half of the year was 123.8 billion yuan, an increase of 2% over the same period last year. In terms of maturity structure, maturing debt accounted for 20%, down 6% from the same period last year, and the pressure on maturing debt was relatively small. The company's net debt ratio is 93.7%, cash short-debt ratio is 1.53 times, excluding accounts received in advance, the asset-liability ratio is 69.9%, reaching the green enterprise standard.

Investment advice: we expect the company to achieve EPS of 1.08 yuan / 1.28 yuan / 1.51 yuan respectively from 2021 to 2023, corresponding to a corresponding PE of 2.0cm 1.7pm 1.4 times, giving a "buy" rating for the first time.

Risk hints: the gross profit margin carried forward is significantly lower than expected, the layout of urban regulation and control policies have been substantially tightened, and the transformation of urban renewal projects is not as expected.