EB SECURITIES: Downgrade CH OVS G OCEANS (00081) rating to "hold". Short-term performance may continue to be under pressure.

EB Securities released a research report stating that the short-term performance of CH OVS G OCEANS(00081) may be under pressure, and the recovery of profitability remains to be observed. The company's investment rating was downgraded to "neutral". Considering the company's pending settlement scale and pressure on profitability, the basic EPS forecast for 2024-2025 was lowered to 0.31 yuan and 0.35 yuan (originally forecasted at 1.06 yuan and 1.29 yuan), with an additional basic EPS forecast for 2026 of 0.42 yuan. As a central enterprise in real estate, the company's strategic layout in lower-tier cities, brand and fund strength in third and fourth-tier cities helps the company maintain sales resilience. EB Securities' main points are as follows: Stable sales performance at the beginning of 2025, with increased land acquisition efforts in the past six months, short-term performance may continue to be under pressure. In 2024, the company's total sales amounted to 40.11 billion yuan, a decrease of 6.3% year-on-year, with an average monthly sales of 3.34 billion yuan. In January-February 2025, the company's total sales reached 4.37 billion yuan, down 3.8% year-on-year (compared to -3.1% for the top 100 real estate companies), with an average selling price of 12,000 yuan/square meter, a 5.6% increase year-on-year. The company achieved sales of 2.21 billion yuan and 2.16 billion yuan in January and February, respectively, with year-on-year decreases of 6.6% and 0.6%, showing a stable start to sales for the year. Continued increase in land acquisition efforts since September 2024: In 2024, the company added land reserves of 1.189 million square meters in Hefei, Yinchuan, and other places, a decrease of 34.8% year-on-year, with a total land price of 5.23 billion yuan, a decrease of 46.5% year-on-year, and an acquisition-to-sales ratio of 13.0%, a decrease of 9.8%, with an average land price of 4,397 yuan/square meter. In January-February 2025, the company added land reserves of 300,000 square meters in Nantong and Hohhot, with a total land price of 1.34 billion yuan, and an acquisition-to-sales ratio of 30.8%. In the past six months (from September 2024 to February 2025), the company has increased its land acquisition efforts, with a total land price of 4.46 billion yuan, and an acquisition-to-sales ratio of 21.0%. This increased investment effort has significantly improved the company's ability to sell and deliver, and the newly acquired projects are mainly located in the main urban areas of second and third-tier cities, with precise product positioning, which helps ensure sales turnover rates. Settlement scale has decreased, profitability remains under pressure: In the first three quarters of 2024, the company achieved total revenue of 26.96 billion yuan, a decrease of 31.0% year-on-year, mainly due to a decrease in settlement resources caused by previous sales declines. Operating profits reached 1.45 billion yuan, down 66.2% year-on-year, with an operating profit margin of about 5.4%, down 5.6 percentage points year-on-year. In the short term, the company's profitability may still be significantly affected by the previous low-margin project settlements, and the profitability is expected to recover after the sale of new high-quality projects. A decrease in settlement scale and profitability will continue to put pressure on the company's performance in the short term. Robust financial position, smooth financing channels: As of the end of the first half of 2024, the company's total interest-bearing debt was 42.13 billion yuan, the non-restricted cash-to-short-term debt ratio was 1.5 times, the net debt ratio was 44.5%, and the asset-liability ratio excluding prepayments was 64.1%, indicating a stable financial position. On February 12, 2025, the company publicly issued corporate bonds to professional investors (with a planned total issuance of 5 billion yuan), which received updated feedback from the Shanghai Stock Exchange. With the advantage of central enterprise credit, the company's domestic financing channels are expected to remain smooth, helping the company continue to reduce overall financing costs. Risk warning: Sales and construction may fall short of expectations, land development may fall short of expectations, market downturn may exceed expectations.