Incident: On February 8, 2024, the company announced sales data for January 2024; on January 19, 2024, the company announced that it successfully issued an additional invoice of 700 million yuan.
Sales performance is still better than the industry average: According to the company's announcement, from January to December 2023, the company achieved cumulative sales volume of 142 billion yuan, +13.6% year over year; cumulative contract sales area of 4.45 million square meters, +7.5% year over year; maintained a positive year-on-year increase. The contract sales amount was 6.5 billion yuan in January 2024, a year-on-year decrease of 26.3%. However, according to Kerry statistics, the year-on-year sales growth rates of TOP10, TOP20, and TOP50 real estate companies in January 2024 were -33.8%, -34.3%, and -35.6%, respectively, and the company's performance is still superior to the industry average.
Relaxation of purchase restrictions in Guangzhou may benefit the company's sales performance: from January 27, 2024, the purchase of houses with a floor area of 120 square meters or more (excluding 120 square meters) within the restricted purchase area of Guangzhou will no longer be included in the scope of purchase restrictions. According to the company's 2023 semi-annual report, as of the end of 2023H1, the company's total land reserves were about 28.13 million square meters, of which 11.34 million square meters were stored in Guangzhou, accounting for 40.3% of the total land storage. Relaxation of Guangzhou's real estate regulation policy may release new demand, which will have a positive impact on companies that account for a relatively high value of goods in Guangzhou.
The credit advantage is obvious, and the financing channels are unobstructed and diversified: the company successfully issued 700 million yuan of additional invoices on the Australian Stock Exchange on January 19, 2024, with an issuance interest rate of 4%. According to the company's 2023 semi-annual report, the company's weighted average borrowing cost for the first half of 2023 was 3.98%, down 13 bps from the same period in 2022 and 18 bps from the full year of 2022. The company's financing costs are in a leading position in the industry and are continuously being optimized.
Investment advice: As an established state-owned enterprise in the Greater Bay Area, the company has always maintained steady operation. Sales performance is superior to the industry average, and good sales performance can support the company's settlement revenue. At the same time, the company has an obvious credit advantage and maintains industry-leading financing costs. We expect the company to achieve operating income of 810/889/95.7 billion yuan in 2023-2025, and net profit to mother of 34.31/37.60/4.154 billion yuan. The corresponding PE was 5.74/5.24/4.74 times, respectively. It was covered for the first time, and a “gain” rating was given.
Risk warning: Sales recovery fell short of expectations, real estate regulation tightened beyond expectations, land acquisition fell short of expectations, etc.