Event: On February 8, 2024, the company announced the operating data for January 2024; on January 11, 2024, the company announced the full-year operating data for 2023.
Sales remained steady and regional development was balanced: According to the company's announcement, throughout 2023, the company achieved a total contract sales amount of RMB 307 billion, a slight increase of 1.9% over the previous year; by region, sales in South China, West China and Shenzhen regions grew faster year-on-year in 2023, with +46.1%, +32.4%, and +27.6% respectively, accounting for 12.2%, 13.7% and 13.5% of the annual sales volume, respectively. Overall, the development between regions was more balanced. In January 2024, the company achieved contract sales of 11.4 billion yuan. Although the year-on-year decline was -28.7%, according to Kerry statistics, the sales amounts of TOP10, TOP20, and TOP50 real estate companies were -33.8%, -34.3%, and -35.6% year-on-year respectively, and the company's performance was still superior to the industry average; the sales volume of the leading company in the same industry, Poly Development in January was -31.2%, China Merchants Shekou -23.4%, and Zhonghai Real Estate was -16.0%.
The operational real estate business maintained rapid development: According to the company's announcement, the company's rental income for the full year of 2023 was 25.6 billion yuan, +39.4%; in January 2024, the rental income from investment properties was 2.43 billion yuan, +11.0% year-on-year; commercial operations performed well.
Investment advice: As a leading enterprise in the industry, the company can still maintain relatively steady performance when overall sales in the industry decline, forming a strong support for the company's real estate sales settlement revenue. At the same time, we are actively developing non-sales business, and revenue from the operating real estate business has maintained a high growth rate. We expect the company to achieve operating income of 2331/2506/264.5 billion yuan and net profit to mother of 279/304/32.4 billion yuan in 2023-2025. The corresponding PE was 5.60/5.14/4.82 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.