The Zhitong Finance App learned that Pacific Securities released a research report saying that the net profit of Poly Real Estate Group (00119) 2026/2027/2028 is expected to be 1.81/2.16/274 million yuan, corresponding to the 26/27/28 PE of 22.92X/19.19X/15.14X, respectively, giving it an “increase in holdings” rating; the bank believes that the company, as a real estate enterprise with a central enterprise background, has strong shareholders, and has an advantage in sales rankings. The land storage structure is gradually optimized, financing channels are smooth, and financing costs are advantageous.
Pacific Securities's main views are as follows:
Recent events
The company released its 2026 semi-annual report. In the first half of 2026, the company achieved operating income of 15.089 billion yuan, a year-on-year decrease of 18.2%, and net profit to mother of -740 million yuan.
Revenue declined slightly and profitability declined
Affected by the reduction in settlement scale, the company achieved revenue of 15.089 billion yuan in the first half of 2026, a year-on-year decrease of 18.2%, and realized net profit to mother - 740 million yuan, compared to 208 million yuan in the same period last year, which changed from positive to negative. The main reasons for the decline in the company's performance include: 1) the company's gross sales margin decreased by 11.45 percentage points to 6.01% compared to the same period last year; 2) the sales period expense ratio was 11.13%, an increase of 0.41 percentage points over the same period last year. The net interest rate was -4.93%, compared to 1.26% in the same period last year.
Contract sales have shown resilience, and sales rankings have been further improved
In the first half of 2026, the company completed contract sales amount of 23.2 billion yuan, ranking 13th in the full-caliber sales list of real estate companies, up 2 places from the end of 2025. Among them, the Yangtze River Delta and Greater Bay Area accounted for 76% of sales, while first-tier cities and Hong Kong contributed 47% and 7% of sales, respectively. The contract sales area is 799,000 square meters, and the average contract sales price is about 2,9051 yuan/square meter, an increase of 5% over the previous year. The company mainly sells 136 projects, of which 3 are the first to be opened, namely Shanghai Poly River Printing, Hangzhou Mingtaoli, and Guangzhou Maritime Printing.
Land acquisition focuses on core cities and reserves high-quality development resources
In the first half of 2026, the company obtained 4 development projects, located in Shanghai, Suzhou, Shenzhen and Wuhan. The total construction area of the additional land reserve is about 285,000 square meters, and the total land cost is 10.8 billion yuan. By the end of June 2026, the company's total land reserve construction area was 11.16 million square meters. By region, the Yangtze River Delta and Pearl River Delta account for 77% of land storage costs, and first-tier and second-tier cities account for 97% of land storage costs.
The three red lines remain green, and liquidity remains abundant
The company's financing channels were unobstructed. The three red line indicators remained green in the first half of 2026. The total loan scale was 67.8 billion yuan, total cash accounted for 15.5% of total assets, and liquidity remained abundant. In late July 2026, 1 billion yuan medium-term notes were issued, and the five-year coupon interest rate was 2.46%. The financing cost and term were further optimized compared to the first half of the year. As of the end of June 2026, the company's average financing cost was 2.75%, down 0.11 percentage points from the end of last year.
Risk Alerts
Real estate industry policy risks; sales improvements falling short of expectations; increased competition in the land market.