23H1's revenue was +44% year-on-year and net profit was +52% year-on-year. Performance growth was impressive and exceeded market expectations. The company issued the 2023H1 performance announcement. 2023H1, the company achieved revenue of 24.36 billion yuan, +44%; by business, the property development business achieved revenue of 22.74 billion yuan, +45.7%, accounting for 93.4% of total revenue, +1.3 pct; gross profit of 3.71 billion yuan, +46%; net profit of 1.28 billion yuan, +52%, exceeding market expectations; basic earnings per share of 0.80 yuan, +33%. The company's revenue grew rapidly, mainly due to the significant increase in the pace of real estate delivery; the company's 23H1 gross profit margin was 15.2%, +0.2 pct; the homologation net interest rate was 5.3%, +0.3 pct; the total period rate (sales, management, finance rate) was 9.5%, +0.4 pct. In addition, the company's other revenue was 640 million yuan, +80% year-on-year, due to increased interest income; minority shareholders' profit and loss was 140 million yuan, -68% year-on-year. By the end of 23H1, the company's contract liabilities reached 236.1 billion yuan, +28% year-on-year, covering 2.4 times revenue in '22.
23H1 sales were +43% year-on-year, and land acquisition intensity was as high as 73%. The industry ranking was rising steadily in a bucking environment. The company announced that in 2023H1, the company achieved full-caliber sales amount of 94.1 billion yuan, +43%; equity sales amount of 74.7 billion yuan, +56%, with an equity ratio of 79%; equity sales area of 3.34 million square meters, +34%; and the company's sales performance was more resilient. According to Kerley's list, the C&D real estate industry ranked 9th in sales, continuing to rise 1 place from the end of '22. The company 23H1 achieved sales repayment of 97.9 billion yuan, with a repayment rate of 104%. At a stage where the fundamentals of the industry are declining sharply, the company can still firmly and confidently guarantee a stable sales scale. It mainly benefits from the company's continued deep cultivation of Tier 1 and 2 cities with good supply and demand relationships, strong product strength, and guarantees the speed of project elimination. 23H1 added 46 lots of high-quality land, with land acquisition amount of 68.4 billion yuan, land acquisition sales ratio of 73%; goods value 129.5 billion yuan, of which Tier 1 and 2 cities accounted for 86%.
By the end of 23H1, the saleable area of the company's land storage was 17.11 million square meters, +5.6% compared to the same period, and the equity ratio was 74%; equity land storage could cover 2.1 times the equity sales area in 22 years, and the company still has claims to supplement land storage in the future.
The three red lines maintained the green level, and financing costs reached a new low, helping the company to buck the trend and expand actively. The company announced that 2023H1, the company's cash on hand was 60.74 billion yuan, +70% year-on-year; after excluding advance payments, the balance ratio was 61%, the net debt ratio was 32.0%, and the short-term cash debt ratio was 6.5 times. The financial situation remained stable, and the three red lines remained green. Currently, in a context where industry financing continues to be tightened, the company's state-owned enterprise background has obvious financing advantages. At the end of the reporting period, weighted financing costs were 3.97%, down 0.36 pct from the end of '22, and financing costs continued to be optimized.
Investment analysis: Performance exceeded expectations, sales investment bucked the trend and maintained a “buy” rating. C&D International Group is rooted in Fujian and adheres to a high-quality key layout. It is a real estate development platform under the Xiamen State-owned Assets Administration Commission, and has a perfect management structure; the sales growth rate is impressive, combining the stability of state-owned enterprises with the flexibility of private enterprises; currently, the three red lines maintain a green record, and have remarkable financing advantages, helping to expand in adversity and achieve overtaking the curve. We believe that the company's future settlement is still highly certain, and at the same time, profit margins are expected to rise at a low level. We maintain the 23-25 net profit forecast of 58.7, 67.9 billion yuan, and 7.79 billion yuan. The current price corresponds to 6.7/5.8 times PE in 23/24, respectively, maintaining the “buy” rating.
Risk warning: The settlement profit margin declined more than expected, and the sales removal rate fell short of expectations.