Revenue fell 17.7% year over year, and Guimu's net profit fell 122.6% year over year. In 2022, the company achieved total revenue of 430.37 billion yuan, a year-on-year decrease of 17.72%. In the same period, the company achieved net profit of 6.052 billion yuan, a year-on-year decrease of 122.6%. Among them, real estate development revenue was 417.296 billion yuan, down 17.8% year on year; construction revenue was 7.568 billion yuan, down 19.1% year on year; other revenue was 5.51 billion yuan, down 11.5% year on year.

The company's equity sales in 2022 were 357.47 billion yuan, a year-on-year decrease of 35.94%. Affected by the market downturn, the company's operating income and net profit scale to the mother declined in 2022. In 2022, the company achieved equity contract sales of 357.47 billion yuan, a year-on-year decrease of 35.94%. In the same period, the company's equity contract sales area was 44.5 million square meters, a year-on-year decrease of 32.99%.

The company carefully expanded land storage, and the allocation was more balanced and diversified. In 2022, the company was more cautious about adding land storage.

78% of the new land storage was located in the five major metropolitan areas. The equity ratio calculated based on land prices was 91%, the average price was 6,204 yuan/square meter. Nine projects were obtained. Based on equity land prices, the proportion of new land reserves located in Tier 1 and 2 cities accounted for 71%. By the end of 2022, the total saleable resources of the company's land storage equity were RMB 1208.3 billion, and the saleable resources of acquired equity were RMB 955.5 billion. In terms of urban energy levels, the company lays out various city types in a balanced manner. Among them, the target is 52% of Tier 1 and 2 cities, and the target is 48% of Tier 3 and 4 cities.

We believe that the company's diversified and balanced layout of land resources will strongly support the company's long-term development in the future.

The company's financial indicators tend to be stable, and the balance and liability structure is continuously optimized. At the end of 2022, the company's balance ratio was 82.25%, down 2.32 percentage points from the same period last year. By the end of 2022, the company had a total available cash balance of about RMB 147.55 billion, and total borrowing fell to about RMB 271.31 billion, down 14.7% from the end of 2021, and the net borrowing ratio was 40.0%, an optimization of 5.4 percentage points compared to the end of 2021. Of bank and other loans, approximately RMB 61205 million, RMB 974.90 million, and RMB 3845 million must be repaid within one year, one to five years, and five years later, respectively. In 2022, the company issued nearly RMB 10 billion in direct financing across the market and received more than RMB 300 billion in intentional comprehensive credit support from more than ten banks.

By the end of 2022, the company's net debt ratio was 39.98%, down 5.47 percentage points from the same period last year; the short-term cash debt ratio was 1.57 times, down 0.72 percentage points from the previous year. The company's balance ratio after excluding prepaid accounts was 71.24%, down 4.50 percentage points from the same period last year. In the same period, the company's gross sales margin was 7.64%, down 10.1 percentage points from the same period in 2021.

Investment advice: Maintain a “better than the market” rating. We expect the company's EPS to be RMB 0.25 and RMB 0.28 respectively in 2023 and 2024. We gave the company the 2023 Dynamic 8-10XPE with a reasonable value range of HK$2.28 to HK$2.85, maintaining the “better than the market” rating. The exchange rate is HKD1 = RMB 0.8758.

Risk warning: The company faces the risk of policy regulation and sales falling short of expectations.