1H23 performance meets market expectations
China International Trade announced 1H23 results: revenue rose 17% year-on-year to 1.94 billion yuan; pre-tax gross profit margin increased by 4ppt to 60.3% (56.5% for the whole of 2022); four expense rates decreased by 2ppt to 6.3%; year-on-year net profit increased 15% to 650 million yuan, deducting non-home net profit increased 37% to 650 million yuan (mainly due to the recognition of 100 million yuan insurance compensation income in the same period last year), in line with market expectations.
Rental property revenue has grown steadily and the hotel business has returned to profitability. The company's 1H23 office revenue rose 2% year-on-year to 800 million yuan, mall revenue increased 14% to 600 million yuan, and apartment revenue increased 19% to 90 million yuan, driving the property rental sector income to a steady growth rate of 8%. At the same time, the company's hotel business rebounded significantly, with revenue rising 132% to 300 million yuan from the same period in 2019 (it has returned to 80% of the same period in 2019), and gross profit margin recorded a small increase compared with 2019 on the basis of reversing losses. Look at the specific business format:
The office occupancy rate at the end of 1H23 was 96.2%, which was higher than the 0.1ppt at the end of 1Q23, with an increase of 0.3ppt over the same period last year. Among them, Phase II and Phase III An increased compared with the same period last year, while Phase I and Phase III B decreased slightly but remained the same compared with the same period last year; the average rent increased by 2% to 637 yuan / flat / month compared with the same period last year, which remained basically stable compared with the previous month, showing strong endogenous resilience in the context of the relatively weak office property market.
The average rental rate of the mall at the end of 1H23 increased to 98.8% month-on-month, unchanged from that at the end of 2022; the average rent increased by 14% year-on-year to 1257 yuan / square month (mainly due to no rent remission during the period and the increase in royalty income collected by turnover), which increased by 7% and 8% respectively compared with 21Ligma in 22 years, with the highest year-on-year increase in Phase 3 B (27%) and the highest absolute rent in the East Building (2359 yuan / flat / month).
The rental rate of apartments at the end of 1H23 increased by 4.5ppt to 82.1% month-on-month, up 14.1 ppt from the same period last year; the average rent was 371RMB / flat / month, which decreased slightly compared with the same month, mainly because the rental rate of large households was higher and its average rent was lower than that of small ones.
Trend of development
The cash flow performance is outstanding, and the full-year results are expected to continue to grow steadily. In 2022, the company's net operating cash flow increased against the trend to 1.8 billion yuan (the highest in history), and 1H23 continued to grow by 9.4% to 1 billion yuan compared with the same period last year, leading to the thickening of cash on hand at the end of 1H23 to 3.7 billion yuan. Considering the controllable scale of the company's subsequent capital expenditure, we believe that the company's "cash cow" advantage is expected to continue to strengthen, and the subsequent dividend ratio is expected to remain high (63% in 2022). At the same time, we expect that the company's annual operating income is expected to achieve steady growth under the support of steady improvement in leased property management and sustained recovery in the hotel business, and the gross profit margin is expected to be roughly the same as the semi-annual level. led to double-digit year-on-year growth in net profit.
Profit forecast and valuation
Taking into account the guaranteed growth of the company's rental income and excellent cost control, the 24-year profit forecast is raised by 6% to 131.4 billion yuan, corresponding to a year-on-year growth rate of 16% and 11%. The current share price corresponds to a 24-year dividend yield of 15.5max 14.0 times 23max 24-year Pmax E and 4.1% Universe 4.5% dividend yield. Maintain the outperform industry rating and raise the target price by 14% to 23.6 yuan to reflect the adjustment of earnings forecasts and increased market risk appetite, corresponding to 18x2023amp 2024 Pmax E and 18% upside space.
Risk
The rental rate and rent growth rate of holding properties are lower than expected; the recovery of consumption is lower than expected.