Introduction to this report:

The company published its 2022 annual report, which was in line with market expectations and showed leading competitiveness in the context of market pressure.

Key points of investment:

Maintain an “increase in holdings” rating. Revenue reached 7.363 billion yuan in '22, down 15.86% from the previous year, and Guimu's net profit was 420 million yuan, down 29% from the previous year, in line with market expectations. Considering the uncertainty of real estate recovery, we lowered the 2023-2024 EPS to 0.85 (-0.14) and 0.99 (-0.16) yuan, added the 25-year EPS forecast by 1.18 yuan, and maintained the target price of 12.00 yuan.

Domestic retail real estate is under pressure. The downward pressure on the company's 202H2 revenue increased mainly due to the company's voluntary withdrawal from many B-side businesses and the impact of the subsequent epidemic. The overseas sales volume of bamboo and stone plastic decking that the company has acquired and expanded in recent years has increased markedly. The future development of the company's multi-category and cross-category real estate may be a new growth direction.

Gross margin is under slight pressure, and attention continues to be paid to rationalizing governance mechanisms to improve management efficiency. The company's gross profit margin in 2022 was 24.14%, a year-on-year decrease of 1.91%. Among them, overseas gross margin increased 1.47 percentage points year-on-year to 18.95%. Judging that it was mainly due to changes in the structure of export products. At the same time, the company continues to strengthen its internal management. Against the backdrop of a 16% decrease in the company's revenue scale, the three rates achieved a slight year-on-year reduction, which already shows the efforts made by the new company management in controlling internal skills.

Operating indicators such as cash flow have remained stable, and the overall receivables risk on the B-side is manageable. By the end of the reporting period, the company had 2,545 million dollars in cash on hand, an increase of 278 million yuan over the previous year; the total accounts receivable were 1,807 million, a year-on-year decrease of 106 million. The payout ratio reflected the company's C-side gene's control over repayments, and the overall company's receivables risk was manageable. Net operating cash flow was 651 million, up 506 million year-on-year, and significantly higher than net profit. The balance ratio remains low at 30.66%.

Risk warning: Macroeconomic downturn, raw material costs rising.