Rongsheng Development (002146): Maintaining High Performance and Actively Investing in Expansion of Soil Storage

Rongsheng Development (002146): Maintaining High Performance and Actively Investing in Expansion of Soil Storage
The core point of view performance maintained high growth, and margins fell slightly.The company achieved operating income of 243 in the first half of 2019.60,000 yuan, an annual increase of 25.7%, net profit attributable to mother was 29.40,000 yuan, an increase of 31 in ten years.1%.The company’s revenue growth is expected to increase the project settlement scale in the first half of the year compared with the same period of the previous year. The growth rate of performance is higher than the revenue growth rate mainly due to the impact of Rongsheng Kanglv’s business, and the minority shareholders’ profit and loss have dropped significantly.In terms of profitability, gross profit margin was 30.4%, down by 1 from 2018.1 average; net margin is 11.8%, down 2 from 2018.The four averages are mainly due to slight fluctuations in the profitability of settlement items.  Steady sales, grasping the acquisition window period and actively investing in the expansion of soil storage.The company’s real estate sales in the first half of 2019 were 465.80,000 yuan, an increase of 16 in ten years.2%, sales area 422.70,000 square meters, an increase of 9 in ten years.9%, with an average sales price of 11019 yuan / square meter, an annual increase of 6.7%.In the first half of 2019, the company received a positive investment style in the end of the year. Through equity acquisition, bidding, and old village reconstruction, it has successively settled in 34 cities in Beijing, Tianjin, Hebei, Yangtze River Delta, and Midwest at a price of 3,419 yuan /The average floor price of square meters obtained more than 63 parcels of land, with a total capacity of 654.20,000 square meters, the land investment amount is 223.US $ 600 million. The intensity of land investment in the first half of the year was 48%, an increase of 31% over 2018.  As of the end of June 2019, the total construction area of the company’s land reserve was 4,059.80,000 square meters.  Affected by the expansion of investment, the leverage ratio increased slightly compared with the end of 2018.Interest-bearing debt accumulated in the first half of 2019 was 677.The net debt ratio in the first half of 2019 increased by the increase in investment intensity in the first half of 2019 compared 都市夜网 to the end of 2018.6 up to 96.5%.As of June 2019, the company has 313 cash on hand.3 ppm, short debt coverage 0.9, before the end of 2018 slightly decreased.  Financial forecast and investment recommendation Maintain BUY rating and lower TP to 13.20 yuan (the original target price was 15.68 yuan).We adjusted the settlement items according to the interim report and adjusted the company’s EPS for 2019-2021 to 2.20/2.77/3.54 yuan (previous forecast was 2.24/2.81/3.61 yuan).As the PE of the comparable company is estimated to decrease in 2019, we adjusted the company’s PE multiple in 2019 to 6X, corresponding to a target price of 13.20 yuan.  Risks suggest that sales in the real estate market have significantly exceeded expectations.  Interest rates rose faster than expected.

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