Zhongnan Construction (000961): Achievement growth, beautiful sales, substantial growth

Zhongnan Construction (000961): Achievement growth, beautiful sales, substantial growth

Event: On the evening of January 13, the company issued an announcement of the 2019 annual results increase.

It is estimated that the net income of mothers will increase by 80% -110% each year in 2019, and the corresponding range is 39.


50,000 yuan, basic profit income1.


24 yuan.

From January to December 2019, the company achieved a contracted area of 1,540.

70,000 square meters, a year-on-year growth of 35%; contracted amount of 1,960.

500 million, an increase of 34% in ten years.

  Opinion: The performance growth is beautiful.

Zhongnan Construction is expected to realize a return to net profit of 80% -110% per year in 2019, corresponding to a range of 39.


50,000 yuan, to achieve basic profit income1.


24 yuan.

The expected increase in net profit is initially due to the increase in the scale of the real estate business, which is likely to exceed the performance commitments given by the company.

According to the company’s equity incentive plan announced in July 2018 and May 2019, the company promises that the 2018-21 performance will increase by no less than 240%, 560%, 1060%, and 1408% from 2017, which means that it will return to motherhood in 2019Net profit 39.

8 billion.

  Sales growth.

The sales amount for the whole year of 2019 was 1,960.

50,000 yuan, an increase of 33 in ten years.

72%; contracted area of 1,540.

700,000 square meters, an increase of 34 in ten years.

63%; average selling price 1.

270,000 yuan / square meter, a year-on-year decrease of 0.


Sales ranked 16th in the industry, an improvement from 18th in 2018.

  Keep holding the ground and lay out accurately.

The amount of land taken in 2019 is 512.

54 million, the proportion of land acquisition amount to sales amount was 26.

14%; take the area of 964.

440,000 countries, the proportion of land area to sales area is 62


The initial average land price was 5,314 yuan / square meter, accounting for 41% of the average sales price.


From the perspective of specific investment layout, it is mainly concentrated in second- and third-tier cities, and the proportion of second-tier cities is 41 in terms of land acquisition.

3%, the proportion of third- and fourth-tier cities is 58.

7%; the third and fourth lines of the company’s layout are mainly the 都市夜网 Yangtze River Delta, the Pearl River Delta’s better fundamentals of the third and fourth lines, benefited from 19-year sales of the third and fourth lines exceeded expectations.  The top five cities in terms of land acquisition amount are: Nantong (17.

2%), Hangzhou (13.

0%), Xi’an (7.

7%), Zhenjiang (4.

9%), Suzhou (4.

8%), Ningbo (4.

6%), Jiaxing (4.

5%), Chongqing (3.


  The net interest rate continued to decline, and the margin of the financing environment improved.

As of the third quarter of 2019, the company’s net debt terminated 175.

6%, a decrease of 15.5% compared to the end of 2018

9 units.

In December 2019, the company issued a 1 billion general corporate bond with a coupon rate of 7.

6%, 0% lower than the interest rate of bonds with the same maturity issued in June 2019.

2 averages, marginal improvement in financing environment.

  Investment suggestion: Central South Construction’s performance will increase, and sales performance will be beautiful. The layout of land acquisition will focus on the Yangtze River Delta and the Pearl River Delta core urban agglomerations, and marginal improvement of the financing environment.

We expect the company’s EPS to be 1 for 2019-2020.

08 yuan, 1.

90 yuan, calculated based on the closing price on January 14, 2020, the corresponding PE is 9 respectively.

17 times, 5.

21 times, maintaining the level of “prudent increase”.

Risk reminder: sharply tighten consumer leverage, mortgages and other residential leverage.