Revenue growth and profit decline, profit recovery can be expected. Maintaining the “buy” rating, Jindi Group adheres to the investment strategy of deepening its cultivation in mainstream Tier 1 and 2 cities. Land reserves are abundant and high-quality, and the debt structure continues to be optimized. At the same time, it continues to explore and layout new real estate businesses and diversification to create new business growth poles.
The company achieved total revenue of 36.86 billion yuan in the first half of the year, an increase of 31.1% over the previous year; net profit of Gimu was 1.53 billion yuan, a year-on-year decrease of 22.2%. Affected by sluggish industry sales, we lowered our profit forecast for 2023 and added 2024-2025 profit forecasts. We expect the company's net profit for 2023-2025 to be 60.0, 63.1 billion yuan, and 6.73 billion yuan (pre-2023 value was 13.67 billion yuan), EPS was 1.33, 1.40, and 1.49 yuan respectively, and the current stock price corresponds to PE 4.6, 4.4, and 4.1 times. We believe that profit recovery can be expected after the company has carried over at a high price and maintains its “buy” rating.
Sales remain resilient and land reserves are plentiful
In the first half of the year, the company achieved a total contract area of 4711 million square meters, an increase of 12.4% over the previous year; the cumulative contract amount was 858.2 billion yuan, a year-on-year decrease of 14.7%. In 2018-2022, the company's sales market share increased steadily. The market share of 2023H1 was 1.4%, and it is still in the first tier of the industry. In the first half of 2023, the amount of land acquired by the company was 119 billion yuan, adding 850,000 square meters of total land reserves, focusing more on core cities, and increasing the unit price of land acquisition.
By the end of the first half of 2023, the company's total land reserves were about 48.78 million square meters, of which Tier 1 and 2 cities accounted for about 73%. The structural distribution was reasonable, laying the foundation for the company's steady development in the medium to long term.
The scale of the property and agency construction business has been steadily expanding. The collaborative development of multiple businesses and Jindi Smart Services achieved revenue of 1.95 billion yuan in the first half of the year, an increase of 11.5% over the previous year. By the end of the first half of the year, the contract management area was about 368 million square meters, of which the management area was about 217 million square meters. By the end of the first half of the year, the company's agency construction business had a cumulative contract management area of over 22 million square meters, and the cumulative saleable value of residential projects had exceeded 150 billion yuan. At the same time, the rental rates of the company's commercial properties, industrial real estate, and long-term rental apartments have all remained stable.
The debt structure continues to be optimized. Shareholders plan to provide credit enhancement support for the company's financing. By the end of the first half of the year, the company's interest-bearing debt was 109.6 billion yuan, down 15% from the previous year. Among them, long-term debt accounted for 62.85%, net debt ratio was 62.9%, net debt ratio was 53.5%, and the debt structure continued to be optimized; the average financing cost was 4.39%, down 0.14 percentage points from the end of 2022. The company announced in September that Fukuda Investment Holdings, the second largest shareholder, intends to provide credit enhancement support for the company's financing, showing optimism about the company's long-term development.
Risk warning: The sales recovery process is blocked, diversified business progress falls short of expectations, and the company's land acquisition falls short of expectations.