On October 27, the company released its three-quarter report for 2023. The company achieved revenue of 9.47 billion yuan in the first three quarters, +400.7% year-on-year; net profit of 780 million yuan, +253.2% year-on-year.
Excellent performance, guaranteed future settlement
In the first three quarters of 2023, the company achieved revenue of 9.47 billion yuan, +400.7% year-on-year; net profit of 780 million yuan, +253.2% year-on-year. The company's losses were mainly due to: 1) a sharp increase in project settlement revenue; 2) gross sales margin reached 26.1%, up 2.43pct year on year; furthermore, as of the end of the third quarter of 2023, the company's advance accounts and contract liabilities were 11.11 billion yuan, +4.9% year-on-year, reaching 4.3 times the 2022 operating income. The company's future revenue settlement is fully guaranteed.
Sales continue to improve, focusing on the local area of Shanghai
In the first three quarters of 2023, according to Kerry's sales ranking, the company achieved a sales amount of 13.56 billion yuan, ranking 73rd in Lexley's sales ranking, and has a stable position in the industry. In the third quarter of 2023, the company has 6 major development projects, 1 newly started project, 1 newly completed project, and 0 new project reserves. On the local side, in April, the company successfully competed for a residential plot in Xinzhuang, Minhang District, Shanghai with 2.01 billion yuan. The concession area was 21,000 square meters and the floor area ratio was 2.0, laying a good foundation for future development.
Smooth financing and stable dividends
In the first three quarters of 2023, the company successfully issued 750 million yuan of corporate bonds and 2.2 billion yuan of medium-term notes, respectively. The issuance interest rates were 3.57% and 3.82% respectively, both of which were at a low level in the industry. By the end of the half year, the company's financing interest rate fell to 4.33%, and financing costs remained low. In 2022, the company's cash dividends accounted for 52.5% of net profit. Since listing, the company has distributed a total of 4.17 billion yuan in cash dividends to shareholders, accounting for 37.2% of the cumulative realized net profit. In the future, as the company's performance continues to be released, the amount of future dividends is expected to rise further.
Investment advice: Chinese enterprises have excellent performance, steady sales, abundant low-cost, high-quality land reserves, good financial conditions, and obvious financing advantages. At the same time, they rely on Shanghai Real Estate Group to advance the urban transformation strategy, and are expected to benefit fully in the future.
We estimate that the company's net profit for 23-25 will be 15.5/19.3/2.42 billion yuan, corresponding to PE 13.3/10.7/8.5 times, respectively, maintaining the company's “increased holdings” rating.
Risk warning: Sales fell short of expectations, profit margins declined, the real estate industry declined at an accelerated pace, and research reports and usage information was not timely.