CHINA OVERSEAS(HK:00688) Tianfeng Securities·2024-08-29 11:46Investment Rating - The investment rating for the company is "Buy" with a target price of HKD 11.64, maintaining the rating for the next six months [6]. Core Viewpoints - The company demonstrated resilience in its performance despite industry fluctuations, with a revenue of CNY 86.94 billion for H1 2024, a decrease of 2.49% year-on-year, and a net profit of CNY 10.31 billion, down 23.6% year-on-year [1][2]. - The company maintains a strong financial position, with a net debt ratio of 38.7% and cash reserves of CNY 100.24 billion, leading to an upgrade in its credit rating by S&P from "BBB+/Stable" to "A-/Stable" [3]. - The company is focusing on cash flow management and has increased its dividend payout ratio to 28%, reflecting a commitment to shareholder returns [1][3]. Summary by Sections Financial Performance - For H1 2024, the company reported a revenue of CNY 86.94 billion, a decrease of 2.49% year-on-year, and a net profit of CNY 10.31 billion, down 23.6% year-on-year. The gross margin was 22.1%, a decline of 0.5 percentage points from the same period in 2023 [1]. - The company proposed an interim dividend of HKD 0.30 per share, with a payout ratio of 28%, an increase of 2.4 percentage points from the previous year [1]. Sales and Land Acquisition - The company's contracted sales for H1 2024 amounted to CNY 148.38 billion, a decrease of 17.7% year-on-year, with a sales area of 5.44 million square meters, down 32.3% year-on-year. The average selling price increased by 21.7% year-on-year to CNY 27,276 per square meter [2]. - The company acquired land in four cities, adding 117,000 square meters of land with a total land cost of CNY 12.89 billion, maintaining a focus on first and second-tier cities [2]. Financial Strength - The company maintains a prudent financial strategy, with all three red lines remaining in the "green" zone. The weighted average financing cost is 3.5%, among the lowest in the industry [3]. - The company has no maturing offshore debt for 2024 after repaying CNY 11.34 billion in Hong Kong dollar loans and CNY 4.99 billion in US dollar guaranteed notes [3]. Commercial Property Performance - The company's commercial property revenue reached CNY 3.54 billion for H1 2024, a year-on-year increase of 19.8%, with shopping center revenue growing by 57.6% [4]. - The occupancy rate for shopping centers reached 96.6%, indicating improved operational efficiency [4]. Investment Recommendations - The company shows strong performance resilience, leading the industry in sales, with quality land reserves and significant financial and financing advantages. The adjusted net profit forecasts for 2024 and 2025 are CNY 23.06 billion and CNY 26.67 billion, respectively, with a new forecast for 2026 at CNY 28.99 billion [4].