1H22 results in-line
- 1H22 earnings in-line, with the decline in GPM offset by better-than-expected revenue booking
- Balance sheet remained solid despite presales declines in 1H22 and stayed firmly in the “Green Camp”
- Interim dividend was declared at HK$0.06/sh, representing a stable dividend payout ratio and an interim dividend yield of 1.6%
- Presales outlook, expected impact from COVID-19 disruptions and dividend policy would be among the key things to watch for
What’s new?
COGO released a set of largely in-line 1H22 results after morning close
Our review
1H22 earnings in-line with expectations, with the decline in GPM offset by better-than-expected revenue booking
- 1H22 revenue rose 16% y-o-y on the back of a 16% increase in development revenue despite disruptions from COVID-19 lockdowns. This locked in 49%/47% of our/market full-year estimate, ahead of expectations
- Gross margin slid 5ppts to 18.4% mainly driven by recognition of inventories write-down of Rmb229.6m and lower GPM projects (1H22 recognised GPM at 19.2% before write-downs) recognized during the period. This fell short of our and market expectation
- SG&A as % of revenue stayed flat at 4.4% while the % of contracted sales surged 4ppts to 6.4% due to 52% plunge in presales in 1H22
- Estimated core net margin fell 2ppts to 7.3%, which translate into 12% decline in core earnings and locked in 42%/40% of ours/market consensus full-year earnings estimates
- Interim dividend was declared at HK$0.06/sh (vs. HK$0.08/sh in 1H21), representing largely stable dividend payout ratio of c.8.5% on core earnings. This translates to 1.6% interim dividend yield per the company’s closing price after the morning trading session.
Balance sheet was well maintained despite its presales plunge and stayed firmly in the “Green Camp”
- Total debt rose 6% from Dec-21 while total cash fell 6%. This translates into a higher net gearing ratio of 46.9% from 35.6% as of Dec-21.
- Cash to ST-debt stood at 2.1x (vs. 2.5x as of Dec-21) while adjusted liabilities to asset ratio improved to 68.2% (vs. 69.4% as of Dec-21). COGO remains “Green Camp” under the “Three-Red-Lines” policy
- Non-restricted cash stayed flat while restricted cash fell 15% vs Dec-21
- ST debt as % of total debt is maintained at 30% (vs. 28% as of Dec-21)
