\u3000\u3000 China Merchants Shekou Industrial Zone Holdings Co.Ltd(001979) (001979)
Event: the company released 2021 performance express
In 2021, the company expects to achieve an operating revenue of 160.64 billion yuan (Unaudited, the same below), an increase of 23.9% year-on-year; The net profit attributable to the parent company was 10.37 billion yuan, a year-on-year decrease of 15.4%.
Comments: the release of carry over income is accelerated, the gross profit margin is still under pressure, and the provision for asset impairment is prudently 4.37 billion yuan; The sales performance is bright, and the energy level of land investment city is improved.
1) the accelerated release of carry over income, the decline of gross profit margin and the prudent provision for asset impairment have put pressure on profits. In 2021, the company achieved a total operating income of 160.64 billion yuan, an increase of 23.93% year-on-year. During the period, the area of the company’s real estate projects completed, delivered and carried forward increased, and the release of carried forward income accelerated; The total profit was 22.84 billion yuan, a year-on-year decrease of 5.25%; The net profit attributable to shareholders of listed companies was 10.37 billion yuan, a year-on-year decrease of 15.35%. It is worth noting that the company’s non net profit attributable to the parent company in 2021 recorded 8.86 billion yuan, down only 2.5% year-on-year, with strong toughness.
The pressure on the company’s profit in 2021 is mainly due to: 1) the high price land projects entered the settlement cycle from 2017 to 2018, and the recent real estate price limit and other regulatory policies restrained the overall profit level of the industry, resulting in the decline of the company’s profit index; 2) The company prudently made provision for asset impairment of inventories and investment properties, totaling 4.37 billion yuan, reducing the company’s net profit attributable to the parent company by 3.46 billion yuan; 3) The company’s investment income decreased by 2.45 billion yuan year-on-year, thus reducing the company’s net profit attributable to the parent company by 2.05 billion yuan year-on-year.
2) sales increased steadily. In 2021, the company achieved a total contracted sales area of 14.645 million square meters, an increase of 17.8% year-on-year; The total contracted sales amount reached 326.83 billion yuan, an increase of 17.7% year-on-year. It is one of the few real estate enterprises that have achieved double-digit growth in sales price in the downward trend of the industry.
3) land acquisition is relatively active, and the energy level of investment cities is improved. In the whole year of 2021, the company added 15.506 million cubic meters of land storage building area, and the total land price of the new land storage was 214.99 billion yuan (a year-on-year increase of 42% and the equity ratio was about 57%), the land acquisition intensity according to the area was about 105.9%, and the land acquisition intensity according to the amount was about 65.8%. The company’s land investment is steady and orderly, and the investment level of cities is improved. The amount of land acquisition in the first and second tier cities accounts for about 74% in 2021, which is conducive to ensuring the follow-up supply and mitigating the risk of de urbanization of low-energy cities.
Profit forecast, valuation and rating: affected by the continuous decline of the industry’s profit space, we lowered the company’s forecast EPS from 2021 to 2023 to 1.23, 1.24 and 1.31 yuan respectively (the reduction range is 23.0%, 30.6% and 33.4% respectively); The current share price corresponds to the PE valuation of 11.2, 11.2 and 10.6 times from 2021 to 2023. At present, the company’s share price fluctuates slightly under the influence of the market environment, but on the whole, it still has long-term competitiveness. The company’s sales performance is outstanding, the energy level of the land acquisition city is improved, the finance remains stable, the credit advantage is obvious, the company is optimistic about the future development potential of the company and maintains the “buy” rating.
Risk warning: the severity and duration of regulation policies in the real estate industry may exceed expectations; Sales progress is limited by bank loan concentration management or less than expected; The project construction and settlement progress may be less than expected.
