\u3000\u300 Shenzhen Zhenye(Group)Co.Ltd(000006) 9 Shenzhen Overseas Chinese Town Co.Ltd(000069) )
The revenue increased steadily and the profitability of Dafu decreased: in 2021, the company achieved a revenue of 102.6 billion yuan, a year-on-year increase of + 25%, and a net profit attributable to the parent company of 3.8 billion yuan, a year-on-year decrease of – 70%. From the perspective of itemized Revenue: 1) the revenue of tourism comprehensive business was 43.3 billion yuan, basically the same as that of the previous year; 2) The real estate business realized a revenue of 59 billion yuan, a year-on-year increase of + 58%. We believe that the reasons for the sharp decline of the company’s net profit attributable to the parent company are as follows: 1) affected by regulation, the company’s gross profit margin decreased with the trend of the industry, and the company’s high gross profit projects in Shenzhen were basically carried forward, resulting in a decline of 38pct to 21% in the gross profit margin of the company’s real estate business in 21 years; 2) The company’s joint venture investment income loss of 600 million yuan; 3) The company calculated and withdrawn the asset impairment loss of 2.2 billion yuan according to the principle of prudence, with a year-on-year increase of + 149%. After adding back the asset impairment loss, the net profit attributable to the parent company was 5 billion yuan, with a year-on-year increase of – 63%.
Sales performance declined slightly and land acquisition became more cautious: in 21 years, the company has achieved a total contracted sales area of 3.99 million square meters, a year-on-year increase of – 14%, a contracted sales amount of 82.5 billion yuan, a year-on-year increase of – 22%, and an average sales price of 20679 yuan / square meter, a year-on-year increase of – 9%. In 21 years, the company added 4.35 million square meters of land, a year-on-year increase of – 58%. The new land acquisition amount of full caliber was 30.3 billion yuan, a year-on-year increase of – 16%, the equity amount was 17.8 billion yuan, a year-on-year increase of – 38%, and the equity ratio was 59%, a decrease of 21pct compared with 20 years. In the past 21 years, the total land storage area of the company was 22.51 million m2, of which the first tier cities accounted for 5.8%, the second tier cities accounted for 51.8%, and the third and fourth tier cities accounted for 42.5%. Relying on its unique government resources, the company actively practices central local cooperation and cooperates with high-quality enterprises in the industry to reduce land costs and investment risks. Of the 23 new lands added in 21 years, 15 were obtained at or close to the base price, with an average floor price of 6960 yuan / m2. We believe that the company’s abundant and high-quality soil storage is the basis for the improvement of the company’s future performance. Through the unique “tourism + real estate” synergy model, the land cost can be effectively controlled, which is conducive to the improvement of the profit space of subsequent projects.
Cultural tourism projects have recovered rapidly, and the profit recovery in the post epidemic era can be expected: in 21 years, the company’s cultural tourism industry has received 77.98 million tourists, a year-on-year increase of + 82%, returning to 150% in 2019. Excluding the new projects in 21 years, the number of visitors increased by + 17% year-on-year to 96% in 2019, which is far higher than the industry average. Guided by the market demand, the company continues to innovate cultural and tourism products, launch a number of new products such as the “Bay light” Ferris wheel of Shenzhen happy harbor and Ningbo happy coast, create new local cultural and tourism landmarks, and constantly improve the competitiveness of the industry. Among them, the “bay area light” Ferris wheel opened only eight months, with an income of more than 100 million, breaking the annual revenue record of single amusement projects in China. We believe that the company, as a leader in the culture and tourism industry, is expected to take the lead in ushering in the repair opportunity with the accuracy and scientization of epidemic prevention and control measures.
Maintain the financing advantages of central enterprises and keep the financial stability: the company’s “three red lines” continue to maintain the green file, and reduce the financing cost by deepening the combination of industry and finance and actively expanding financing channels. In the 21st year, the company used direct financing, bond issuance, equity financing, bond guarantee plan, supply chain financing and other means to achieve financing of 58.6 billion yuan, with an average financing cost of 4.46%, a decrease of 0.02 PCT compared with 20 years. The company has abundant liquidity. The monetary capital of the company at the end of 21 years was 67.6 billion yuan, an increase of 7.1 billion yuan over the beginning of 2021, accounting for 14% of the total assets and + 12% over the beginning of the period. The company’s operating cash flow remained healthy, with 19.2 billion yuan in 21 years, meeting the company’s overall investment and operation needs.
Investment advice: buy. We believe that as a central enterprise, the company has unique government and industrial resources, prominent financing cost advantages, and strong subsequent performance flexibility after 21 years of bad luck. After the change of Mr. Zhang Zhengao, the former general manager of Poly Group, the real estate industry is expected to usher in a new opportunity for development. We estimate that the company’s net profit attributable to the parent company from 2022 to 2024 will be RMB 4.0 billion, RMB 4.4 billion and RMB 5 billion, corresponding to EPS of RMB 0.48, RMB 0.53 and RMB 0.61. We will give the company a double Pb valuation in 2022, target price of RMB 9.9 and maintain the “buy rating”.
Risk tip: the aggravation of the epidemic affects the income restoration of cultural tourism business, and the progress of land hook projects is less than expected.
