Core views:
Settlement profit margins are declining under pressure. The company disclosed its 2023 interim results. 23H1 revenue was 27.17 billion yuan, -8.8% year-on-year, mainly due to a decrease in delivery area (-9.4% year-on-year). The gross profit margin for real estate settlement was 16.1%, down 2.0pct from the previous year. After reducing the impact of impairment, it was lower than the full year of '22 (18.8%). Gimu's net profit for the first half of the year was 1.72 billion yuan, -29.8% year on year, and 6.3%, down 1.9 pct from 22H1. After reducing the impact of impairment, it was lower than 2.6 pct for the full year of '22.
Expand business advantages and seize investment opportunities in the second half of the year. According to the company's interim report, the company's 23H1 achieved sales amount of 25.9 billion yuan, +24.6% year on year. Volume and price increased sharply, the return rate remained high (101.8% full caliber), and the sales equity ratio fell to 78% following the investment side. According to the company's interim report, on the investment side, the company 23H1 obtained 3 projects (2 in Hefei and 1 in Yinchuan), with a land acquisition amount of 3.5 billion yuan, a construction area of 470,000 square meters, a goods value of 7.5 billion yuan, 100% equity, 13.7% land acquisition effort, fast turnover, and an overall gross profit margin of 21.2% for the three projects. The company's book cash at the end of the 23H1 period was 32.81 billion yuan, +12% compared to the end of '22, and +7.6% year on year, reaching a record high.
The debt structure has been optimized, and financing costs have been reduced. At the end of the 23H1 period, the company's interest-bearing debt was 48.32 billion yuan, +1.5% compared to the end of '22. There are three red lines of green (cash short-term debt ratio of 1.79x, net debt ratio of 40.5%, and withholding balance ratio of 67.2%). The financing cost was 4.4%, down 40 bps from the end of '22.
Profit forecasts and investment recommendations. The company actively balances the relationship between volume and price, focuses on investing in high-turnover projects, and continues to expand its operating advantages. Net profit for 23-24 is estimated to be 3.49 billion yuan or 3.84 billion yuan, or +11% and +10% year-on-year, corresponding to 2.9xPE and 2.7xPE. In terms of reasonable value, the reference comparable company gave the company a reasonable valuation PE level of 5.0x (23 years), and a reasonable value of HK$5.35 per share per share (HKD/RMB exchange rate 0.9158), maintaining the “buy” rating.
Risk warning. Industry demand-side policies fell short of expectations; there was some uncertainty about the company's sales scale; industry profit margins fluctuated.