\u3000\u3 China Vanke Co.Ltd(000002) 244 Hangzhou Binjiang Real Estate Group Co.Ltd(002244) )
In 2021, the newly added value is sufficient, and the net profit margin is about 10.04%
In 2021, the company acquired 38 pieces of land in total, with a total amount of 74.1 billion yuan; Among them, the amount of land acquisition in Hangzhou was 29.886 billion yuan, ranking first in the list of land acquisition in Hangzhou.
We expect that the company’s land acquisition project in 2021 will have a sales value of 141.2 billion yuan, a net profit of 14.2 billion yuan and a net profit attributable to the parent company of 7.1 billion yuan. As the project selling price and construction and installation cost are easily affected by various factors, thus affecting the profit margin, we have carried out sensitivity calculation: on the premise of constant unilateral cost, the net profit margin will increase by about 0.3 percentage points and the net profit margin of equity will increase by about 0.2 percentage points for every 0.5% increase in the overall average sales price; On the premise that the average sales price remains unchanged, the net profit margin will increase by about 0.3 percentage points and the net profit margin of equity will increase by about 0.2 percentage points for each 0.5% decrease in unilateral cost. The net profit margin and equity net profit margin are 10% and 5% respectively.
The overall layout in the province, the land acquisition rights and interests were improved, and the profit margin remained stable
Since 2018, the company has actively expanded soil storage and expanded to other cities in Zhejiang Province while maintaining Hangzhou’s leading position. From 2018 to 2021, the company’s new capacity building areas were 3.47 million m3, 2.95 million m3, 4.32 million m3 and 4.62 million m3 respectively, of which Hangzhou’s land acquisition accounted for 39%, 54%, 75% and 39% respectively.
In 2021, the company increased the proportion of land acquired outside Hangzhou in Zhejiang Province. After the price limit of new houses, the price difference of real estate in Hangzhou narrowed and the profit margin of the project was squeezed; Other cities in the province are less affected by the price limit. Increasing the proportion of land acquisition in other cities is conducive to improving the gross profit margin. We estimate that the overall gross profit margin of new projects in Hangzhou in 2021 is about 7% lower than that of new projects in other cities.
In addition, the company continued to improve the equity ratio of land acquisition to balance scale and profit. From 2017 to 2020, the proportion of equity sales in the company’s commercial housing sales increased from 44.1% in 2018 to 51.3% in 2020, and the proportion of equity in the company’s new projects continued to increase to 52.6% in 2021.
The advantages of regional deep cultivation are obvious, with sufficient cash and a record low financing cost
The demand of Zhejiang Province is relatively tough. Deep cultivation in Zhejiang is conducive to the company’s rapid sales collection. In 2021, the company achieved sales of 169.1 billion yuan, a year-on-year increase of 24%, a record high; Sales receipts reached 68.3 billion yuan, an increase of 30% year-on-year. In addition, small radius management gives the company a significant cost advantage. The cost rate is measured by the ratio of period expenses to cash received from selling goods and providing services (instead of sales receipts). The management rate is always maintained below 1%, and the sales rate is lower than the industry average.
In 2021, the financing cost of the company decreased by 0.3 percentage points to 4.9% compared with the previous year. Timely payment collection and smooth financing reflect the steady operation ability of the company.
Profit forecast and investment suggestions
According to the project settlement, we revise the company’s profit forecast. We expect that from 2021 to 2023, the company will realize operating revenue of 37.02 billion, 54.18 billion and 67.21 billion (the previous value is 50.08 billion, 59.35 billion and 72.33 billion), with a year-on-year increase of 29.4%, 46.4% and 24.1%; The net profit attributable to the parent company was 2.6 billion, 3.34 billion and 4.14 billion (the previous value was 3.78 billion, 4.48 billion and 4.94 billion), with a year-on-year increase of 11.7%, 28.3% and 24.1%; Diluted earnings per share are 0.84, 1.07 and 1.33, corresponding to 8.2 times, 6.4 times and 5.1 times of PE. The company is in the process of continuous improvement of fundamentals. The early high turnover strategy has entered the performance release period, and continues to actively expand high-quality soil storage. The future profits are guaranteed and the “buy” rating is maintained.
Risk tips: the tightening of financing environment exceeds expectations, the tightening of real estate regulation policies exceeds expectations, the double centralized transfer rules are further changed, and the quoted data lags behind or is not timely
