Huafa Properties(SH:600325) HTSC·2024-09-03 08:03Investment Rating - The investment rating for the company is maintained as "Buy" with a target price of RMB 6.84 [1][7]. Core Views - The company's performance is currently in an adjustment period, with a significant decline in revenue and net profit for the first half of 2024. Revenue decreased by 21% year-on-year to RMB 24.84 billion, and net profit attributable to the parent company fell by 34% to RMB 1.26 billion [1][2]. - The report highlights the company's reliance on the support from its parent group to revitalize existing assets and manage financial challenges [4][12]. Summary by Sections Financial Performance - For the first half of 2024, the company reported a revenue of RMB 24.84 billion, down 21% year-on-year, and a net profit of RMB 1.26 billion, down 34% year-on-year. The expected EPS for 2024-2026 is projected to be RMB 0.57, RMB 0.61, and RMB 0.62 respectively [1][5][12]. - The gross margin decreased by 2.1 percentage points to 16.8% due to the impact of the real estate market adjustment [2][12]. Sales and Land Acquisition - The company's sales amount for the first half of 2024 decreased by 41% year-on-year to RMB 45.2 billion, with a sales area down by 33% to 1.67 million square meters. The company has slowed its land acquisition pace, acquiring only two plots in Shanghai and Guangzhou at a total cost of RMB 5.7 billion, marking the lowest level in five years [3][12]. Non-Development Business Growth - Non-development business segments showed strong revenue growth, with commercial rental income increasing by 45% to RMB 370 million and property management income rising by 27% to RMB 850 million [2][12]. Financing and Support - The company maintained a green status under the "three red lines" policy, with a financing cost of 5.13%, down 35 basis points from the previous year. The parent group is actively supporting the company in revitalizing its existing assets [4][12].