\u3000\u3 Guangdong Shaoneng Group Co.Ltd(000601) 155 Seazen Holdings Co.Ltd(601155) )
Revenue increased steadily, and the profit margin of development dragged down profits
The company achieved operating revenue of 168.23 billion yuan (YoY + 15.6%) and net profit attributable to parent company of 12.6 billion yuan (yoy-17.4%). The overall gross profit margin was 20.4%, of which the gross profit margins of real estate development and sales, property rental and management were 17.68% and 72.64% respectively, a decrease of 4.06 PCT and an increase of 1.88 PCT over the previous year.
We believe that the company’s increase in income but not profit is mainly affected by two aspects: 1) the decline of gross profit margin of development business; 2) Under the principle of prudence, the provision for asset impairment increased by 3.24 billion yuan to 4.84 billion yuan over the same period last year. The provision for asset impairment can cushion the downward pressure on the profit margin of development business; And the company’s Q4 gross profit margin continued to increase by 1.13pct to 21.57% month on month, showing a bottom recovery trend, and the company’s overall profitability is expected to stabilize in the future.
The sales performance is stable and adheres to the strategy of regional deep cultivation
In 2021, the company achieved a sales amount of 233.8 billion yuan (yoy-6.8%), a sales area of 23.55 million square meters (YoY + 0.3%), an average sales price of 9928 yuan / ㎡ (yoy-7.1%), an increase in volume and a decrease in price. Under the strategy of regional deep cultivation, the company’s sales share ranks the top three in Jiangsu Province and Tianjin, and ranks the top five in several prefecture level cities.
By the end of 2021, the company has a total of 138 million square meters of soil storage, which can meet the needs of development and operation in the next 2-3 years. We believe that on the premise of sufficient reserves, regional deep cultivation is conducive to the company to accumulate local high-quality resources and form a good brand reputation; So as to create a virtuous circle and further promote the improvement of market share.
Carry out the strategy of combining light and heavy, and continue to layout Wuyue square
The company has arranged 188 Wuyue squares in 135 cities across the country, of which 130 projects have been opened, with an average rental rate of 97.63%. In 2021, the rental income will be 8.6 billion yuan (YoY + 51.7%). In that year, the company acquired 32 new Wuyue squares and added 10.29 million m2 of commercial land storage, accounting for about half of the total construction area of the new land storage.
We believe that the synergy and complementarity between housing and Commerce has built the core competitiveness of the company. In 2021, the company’s single commercial project revenue was about 66 million yuan, an increase of 09 million yuan over 2020, which can cross the real estate cycle and continuously create stable cash flow for the company; On the other hand, the proportion of commercial operation in revenue increased by 1.0pct point to 4.7% compared with 2020. Since the gross profit margin of commercial section is significantly higher than that of residential development, the increase of income proportion is conducive to the improvement of profitability.
The three red lines enter the green file, the financing is smooth and the cost is reduced
The debt structure of the company was improved. The asset liability ratio was 69.95%, the cash short debt ratio was 1.07, and the net debt ratio was 48.12%. Thanks to the steady operation style, the comprehensive financing cost decreased by 15bp to 6.57% compared with the same period last year.
In 2021, while issuing domestic corporate bonds, the company issued 704 million unsecured low interest us dollar bonds. The expansion of direct financing channels promoted the decline of comprehensive financing costs. In addition, based on the good credit situation, many institutions raised the company’s main rating, and MSCI raised the company’s ESG rating. The improvement of credit rating reflects the company’s stable financial level.
Investment suggestion: we believe that the decline of the company’s 2021 performance reflects the historical reason for the narrowing of the real estate price difference in the past three years. The company has made provision for inventory impairment, and the proportion of superimposed business continues to increase, which can support future profitability. Due to the rise of land price and the decline of early sales scale and expected completion area in the future, we lowered the company’s profit forecast from 2022 to 2023. We expect that from 2022 to 2024, the company will realize operating revenue of 185.6 billion, 206.6 billion and 229.1 billion (2011 billion and 225.1 billion before 2022 and 2023), with a year-on-year increase of 10%, 11% and 11%, and realize net profits attributable to the parent company of 13 billion, 13.7 billion and 14.6 billion (22.1 billion and 25.6 billion before 2022 and 2023), with a year-on-year increase of 3%, 5% and 7% respectively. The company continues to promote the two wheel drive strategy of both light and heavy, with financial safety and stable operation. The current share price of the company corresponds to 5.8 times of PE in 2022, maintaining the “buy” rating.
Risk tips: the tightening of financing environment exceeds expectations, the tightening of real estate regulation policies exceeds expectations, the change of double centralized transfer rules, the lag or delay of quoted data
