occurrences
On August 25, 2023, C&D International Group disclosed its performance report for the first half of 2023. In the first half of the year, it achieved operating income of 24.36 billion yuan, +44% year-on-year; net profit of 1.28 billion yuan, or +52% year-on-year.
reviews
There was a high increase in revenue and profit and other indicators: 1H23's revenue increase was mainly due to an increase in property development revenue (93.4% of total revenue), +45.7% year-on-year, of which 1.8 million square meters were completed and delivered, +143% over the same period. The 1H23 gross profit margin was 15.25%, a slight increase of 0.20 pct over the previous year. The gross margin level of individual delivered projects increased during the period. 1H23 Total sales expenses and management expenses accounted for 7.9% of revenue, an increase of 0.53 pct over the previous year, mainly due to an increase in provision for impairment of inventories (including management expenses). 1H23 net profit increased 11% year on year, while net profit to parent increased 52% year on year, mainly due to the profit and loss of minority shareholders of settlement projects -65% year on year.
Sales growth remained resilient, and repayment efficiency continued to improve: 1H23 achieved full-caliber contract sales of 94.1 billion yuan, +43% year-on-year; the equity ratio was 79%, an increase of 6 pct over the same period last year; and the industry ranking rose to 9th (10th in 2022). The main sales project is located in the core city and core area. The average sales price of 1H23 is 21,879 yuan/㎡, +8.3% over the same period. Adhering to deep urban cultivation, a total of 38 cities in 1H23 entered the top 10 local sales, of which the single cities of Shanghai and Xiamen had sales volume exceeding 10 billion yuan. The repayment amount for 1H23 full-caliber sales was 97.9 billion yuan, with a repayment ratio of 104%. It has remained high for many years to ensure safe cash flow.
Seize opportunities to expand the land market and supplement high-quality soil storage in core cities: 1H23 obtained 46 projects in 25 cities, with a total land acquisition amount of 68.4 billion yuan, land acquisition intensity (land acquisition amount/sales amount) 0.73, ranking first in the industry; supplementary saleable value of 129.5 billion yuan (66% equity ratio), Tier 1 and 2 cities accounted for 86%, and the amount of land acquired in Hangzhou and Shanghai exceeded 10 billion yuan. By the end of June 2023, the company's total land storage area was 17.11 million square meters (71% equity ratio), Tier 1 and 2 cities accounted for 74%, and new goods acquired after 2022 accounted for 60%.
Asset liquidity is high, and the structure is secure and stable: 1H23's total assets were 469.7 billion yuan, up 19.4% from the end of 2022, of which total inventory and monetary funds accounted for 75%; the three red lines were stable in the green zone. After deducting advance accounts, the balance ratio was 61.4%, net debt ratio 32.0%, and short-term cash debt ratio was 6.5 percent; financing costs continued to drop. The average interest rate for interest-bearing debt was 3.97%, down 36 BP from the full year of 2022. The average interest rate for new bank loans during the year was only 2.3%.
Investment advice
The company's revenue and profit have increased rapidly, operations and sales are resilient, investments seize high-quality opportunities, and support the company's continuous development. Profit forecasts remained unchanged. Net profit for 2023-25 was $62.3, 85.1 billion, and $10.17 billion, respectively, with year-on-year growth rates of 26.3%, 36.7%, and 19.5%, respectively.
The current price of the company's stock corresponds to a PE valuation of 5.9/4.3/3.6, maintaining a “buy” rating.
Risk warning
The implementation of the policy fell short of expectations; sales in the real estate market continued to be sluggish; other housing enterprises defaulted on contracts.