\u3000\u3 Jointo Energy Investment Co.Ltd.Hebei(000600) 048 Poly Developments And Holdings Group Co.Ltd(600048) )
Event: on April 18, 2022, the company issued the annual report of 2021.
Key investment points
The sales scale increased against the trend, and the urban deep cultivation effect was remarkable: in 2021, the company grasped the market rhythm, flexibly laid out and pushed goods, grabbed the sales window, and achieved a contract amount of 534929 billion yuan, a year-on-year increase of 6.38%; The contracted area was 333302 million square meters, a year-on-year decrease of 2.23%. During the reporting period, the sales contribution of the company’s 38 core cities reached 78%. The regional structure remained stable. The total contracted sales in the Pearl River Delta and Yangtze River Delta exceeded 280 billion, accounting for 53% of the total sales. There are 17 cities with 10 billion contracts in a single city, an increase of 2 compared with 2020, with a total sales contribution of more than 340 billion yuan.
Investment and expansion efforts are among the best, and the window of land acquisition is accurately captured: in 2021, the company actively supplemented soil storage, expanded 145 projects, and increased the floor area ratio of 27.22 million square meters. The amount of land acquisition is in the forefront in the Yangtze River Delta, Beijing Tianjin Hebei, Guangdong, Hong Kong, Macao and the central and western regions. Moreover, the company strictly abides by the bottom line of project profits and selectively sinks the top three tier cities in the Yangtze River Delta. In the second and third batches of centralized land auction in 2021, the threshold of land auction was loosened and the profit side of land acquisition was repaired. The company quickly increased investment to obtain high-quality plots with low premium rate in Guangzhou, Nanjing and Xiamen, so as to realize contrarian layout. We believe that the company has obvious competitive advantages in financing channels and financing costs, and will usher in more opportunities to supplement high-quality soil reserves in 2022.
Steady growth in revenue scale and slight contraction in profit scale: during the reporting period, the company achieved a total operating revenue of 285024 billion yuan, a year-on-year increase of 17.19%; The net profit was 37.189 billion yuan, a year-on-year decrease of 7.14%; The net profit attributable to the parent company was 27.388 billion yuan, a year-on-year decrease of 5.39%, mainly affected by the decline in the profit margin of real estate projects. During the reporting period, the company’s gross profit margin was 26.80%, a year-on-year decrease of 5.79 percentage points, consistent with the downward trend of the industry, and the gross profit margin was still higher than the industry average. In the future, with the continuous introduction of new high-quality projects, the performance of gross profit margin will still be under pressure.
The financial structure has been continuously optimized, and the financing level is at a low level: under the restriction of “two red lines” of the bank and the tightening of credit, the sales collection rate of the company in 21 years is still as high as 93.8%; At the end of the year, the company’s cash on hand was 171384 billion yuan, a year-on-year increase of 17%, the second largest in the industry; The average financing cost of 4.46% is low in the industry, which helps the company build a safety cushion for development. In addition, from 2019 to 2021, the proportion of the company’s one-year maturing liabilities continued to decline from 25% to 19%, and the asset structure continued to be optimized. In terms of “three red lines”, the company maintains the green grade and is rated “investment grade” by three major international rating agencies, with a stable outlook.
The non residential sector is in full bloom, and the industrial scale continues to expand: 1) property sector: revenue of 10.78 billion yuan in 21 years; The net profit attributable to the parent company is 850 million yuan. The contract management area increased to 656 million square meters, and the area under management was about 465 million square meters, a year-on-year increase of 33%. 432 third-party projects were newly signed, and the amount of projects above tens of millions accounted for more than 40%. From 19 to 21, the compound growth rate of third-party project revenue was as high as 81.7%, becoming the core engine driving the growth of this sector. 2) Commercial sector: 35 shopping centers have been opened in 21 years, and the projects under operation and preparation are distributed in 38 cities such as Guangzhou, Shanghai and Wuhan; The opening area is 2.475 million square meters. 3) Rental housing sector: 43 projects in operation in 21 years, covering core cities such as Shanghai, Guangzhou, Hangzhou and Chengdu, with a total of 6120 rooms opened. In 21 years, the company cooperated with China Construction Bank to set up public offering REITs for rental housing, and further opened the chain of “investment, financing, management and return” of long-term rental business. 4) Fund sector: the cumulative management scale of the company’s fund exceeds 170 billion yuan, and its SINOSURE fund and poly capital won the “top 10 most powerful real estate funds in China in 2021”.
Investment suggestion: buy. We believe that the company’s land reserve focuses on the first and second tier core cities, with relatively solid fundamentals. As a large central enterprise, the company has significant advantages in financing channels and financing costs. It still has strong competitive advantages in the follow-up land auction, and the company’s long-term development logic is still established. We expect the company’s EPS to be RMB 2.45, 2.69 and 3.00 per share in 22-24 years. With reference to the valuation of comparable companies, we will give a PE valuation of 10 times in 2022 and a buy rating corresponding to the target price of RMB 24.5.
Risk warning: the short-term profit of development business is down, and the profit growth rate is lower than expected; Policy improvement and demand repair are not as expected.
