Core views
In the first three quarters, the company achieved revenue of 770 million yuan, an increase of 9.9% over the previous year; realized net profit of 100 million yuan, an increase of 9.7% over the previous year, and achieved steady growth in performance. In the third quarter, the company continued its expansion efforts and successfully signed the Jinhe Cross-border Jing'an Space project through asset-light operations. The layout in Shanghai was further deepened. At the end of the third quarter, 74 projects were under management, covering an area of more than 1.35 million square meters. The company's project operations continued to improve. The rental rate of the same caliber of projects under management in late September increased by 2-3 percentage points compared to the end of June. The number of renters and the number of irregular renters in the third quarter narrowed by more than 50% compared to the same period last year, and the demand for current tenants was stable. We are optimistic about the future development of the company as a benchmark enterprise in the field of urban renewal.
occurrences
The company released its 2023 three-quarter report. In the first three quarters, it achieved operating income of 770 million yuan, an increase of 9.9% over the previous year; net profit of 100 million yuan, an increase of 9.7% over the previous year.
Brief review
The performance of the first three quarters increased steadily. In the first three quarters of 2023, the company achieved revenue of 770 million yuan, a year-on-year increase of 9.9%; of these, revenue for the third quarter was 270 million yuan, an increase of 51.8% year-on-year, mainly due to the impact of the macroeconomic environment in the same period last year, and the company implemented rent relief. Net profit for the first three quarters was 100 million yuan, an increase of 9.7% over the previous year, and performance achieved steady growth; in the first half of the year, Jin and Daning Financial Intelligence Center changed the cooperation model and terminated confirmation of use rights assets and rental liabilities, generating asset disposal income of 0.8 billion yuan, which supported performance.
Shanghai fell one more time, and operations continued to improve. In the third quarter, the company continued its expansion efforts and successfully signed the Jinhe Cross-border Jing'an Space project through asset-light operations, adding about 30,000 square meters of management area; the project is located in the core area of Jing'an District, Shanghai, and the company's layout in Shanghai was further deepened. By the end of the third quarter, the company was managing 74 projects, with an area under management of more than 1.35 million square meters. With the gradual recovery of corporate leasing demand, the company's project operations continued to improve. The rental rate of the same caliber of projects under management in late September increased by 2-3 percentage points compared to the end of June; the number of renters in the third quarter and the number of irregular renters narrowed by more than 50% compared to the same period last year, and the demand for current tenants was stable.
Keep profit forecasts and buying ratings unchanged. Optimistic about the future development of the company as a benchmark enterprise in the field of urban renewal, we predict that the company's EPS for 2023-2025 will be 0.26/0.33/0.40 yuan, keeping the purchase rating and target price of 8.32 yuan unchanged.
Risk warning:
1. The recovery of the domestic commercial market fell short of expectations, affecting the increase in the rental rate and rental income of the company's projects. There is some uncertainty about the overall growth of the domestic economy. Most of the company's tenants are small to medium tenants. If consumption recovery falls short of expectations, the rental rate and rent increases of the company's projects face some uncertainty.
2. New expansion projects may not progress as expected. The company's new expansion projects may face some uncertainties, causing the progress of construction projects, investment, etc. to fall short of expectations, causing a drag on the company's performance.
3. The pace of project expansion may fall short of expectations and the risk of contract expiration. The company engages in various new projects, and the speed of development depends on close negotiations between the two parties. Some of the company's projects are facing expiration, and there is uncertainty about renewal.