Relying on the country's deep investment in Xi'an, future performance can be expected to be released, giving Tiandiyuan the “buy” rating as a listed company under the Xi'an Hi-Tech Group, with residential development as its main business, maintaining sales of 10 billion dollars. Investment has maintained a certain intensity. Unsold and sold uncarried resources are sufficient, and the debt structure is continuously optimized. Xi'an is deeply cultivating its advantages to help improve profitability, and is optimistic that the company's future performance will continue to be unleashed. We expect the company's net profit to be 525, 649 and 761 million yuan in 2023-2025, the corresponding EPS is 0.61, 0.75, and 0.88 yuan. The current stock price corresponding to PE is 6.3, 5.1, and 4.4 times, covering the “buy” rating for the first time.
Sales maintained a scale of 10 billion dollars, and the pace of construction commencement and completion was steady
Influenced by the pace of project promotion, the company's sales have fluctuated in recent years, maintaining an average scale of 10 billion dollars in 2020-2022. In 2022, the company benefited from the popularity of projects in Xi'an, Xianyang and Suzhou. The company's annual sales amount and area were 10.804 billion yuan and 6106,600 square meters respectively. The sales amount and area to equity ratio of sales amount and area were 84% and 78% respectively, and the overall equity ratio of the project was relatively high. In 2022, the company started a new construction area of 646,300 square meters and completed an area of 1,371,400 square meters, completing 99% and 134% of the plans at the beginning of the year, respectively, and the pace of commencement and completion was steady.
Investments are focused on key cities, and unsold resources are relatively sufficient
The company mainly invests in the market through public tenders, and acquires land through models such as equity mergers and acquisitions and cooperative development in due course. With new land reserves relatively abundant, the company's investment in 2022 slowed. In the first half of the year alone, the company obtained two parcels of land in the Xi'an High-tech Zone, with a land acquisition amount of 3.2 billion yuan and a land area of 250,000 square meters. By the end of 2022, the unsold area of the company's new homes was about 1.98 million square meters, of which the unsold area of the single city of Xi'an was about 1.07 million square meters; the unsold area of the single city of Xi'an was about 930,000 square meters, of which the unsold area of the single city of Xi'an was about 490,000 square meters.
Profit levels have increased, and financing channels are relatively smooth
In 2022, the company's revenue was 10.55 billion yuan, up 52.0% year on year; net profit of the mother was 343 million yuan, down 9.1% year on year, mainly due to a large increase in profit and loss for minority shareholders; gross margin increased 2.1 percentage points year on year to 24.8% year on year, and net sales margin increased 0.6 percentage points year on year to 6.6% year on year. The company mainly raises capital through bank loans, open market financing, and trust loans. The financing channels are relatively scattered. The total amount of interest-bearing debt in 2022 was 12.91 billion yuan, a decrease of 13% over the previous year. Affected by the weak strength of its own capital, the company's financial leverage ratio is high. The cost of comprehensive financing in 2022 was 7.49%, which is higher than the mainstream level of the industry, and there is plenty of room for pressure reduction.
Risk warning: Relaxation of industry policies fell short of expectations, and sales recovery in Xi'an fell short of expectations.