Net profit attributable to mother fell sharply, downgraded to “holding” rating
Jindi Group released its annual report for the year 23, achieving full year revenue of 98.13 billion yuan (yoy -18.4%) and net profit of 890 million yuan (yoy -85.5%), which is in line with the performance forecast. It is proposed to distribute $0.0197 per share. Due to fluctuations in the bond market and the impact of declining sentiment in the real estate market, we expect the company's EPS for 2024-2026 to be 0.20/0.21 yuan (1.20/1.34 yuan before 2024-2025), respectively. Due to the slow release of the company's short-term net profit to mother, we switched to the PB valuation method. Comparable to the 2024 Wind, the average PB was expected to be 0.38 times. Due to the high pressure on the company's short-term debt, the company was given 0.3 times PB in 2024, with a target price of 4.38 yuan (previous value of 9.54 yuan), and lowered to a “holding” rating.
Revenue and gross margin both declined, and preparations for impairment continued to affect net profit settlement volume due to a decline in revenue. During the period, the company's settlement area was 4.863 million square meters, -21.1% YoY, and settlement revenue was -21.7% YoY to 85.47 billion yuan. The gross margin declined further. The gross margin of the development business fell 3.8 pct to 16.2% year on year. Among them, the regions with the biggest decline were in Northeast China and Central China. In addition, the two major factors affecting net profit attributable to mother are: 1) poor yield of high-equity projects, and minority shareholders' profit and loss ratio increased sharply by 39 pcts to 72% of net profit; 2) Continued significant depreciation after 2022, with asset impairment losses and credit impairment losses totaling 3.4 billion dollars. In addition, earnings from non-consolidated projects also declined significantly, with investment income of -51% year-on-year to $2 billion. The company still delivered more than 113,000 units and completed about 13.43 million square meters this year, and plans to complete 10.74 million square meters in 2024 to support next year's settlement.
Develop businesses to shrink and transform related industries to preserve development potential
During the period, the company signed a contract amount of 153.6 billion yuan, with a contract area of 8.77 million square meters, a year-on-year difference of -30.8%/-14.0%.
The new construction area was 3.3 million square meters during the period, -37%; in terms of investment and development, the company stopped acquiring land in September 2023, and the annual land acquisition amount was 12.5 billion yuan, and the land acquisition intensity was 8%. By the end of the period, the company's total land reserves were 41 million square meters, equity soil reserves were 18 million square meters, and the share of Tier 1 and 2 cities remained at 73%. The company plans to have a construction area of 1.83 million square meters in 2024, which is -45% compared to the actual construction in 2023. Sales volume is expected to continue to shrink in 2024. The increase in scale is the property management, property leasing, and construction agency business. Property management and property rental revenue were +16%/+28% year-on-year respectively, and the contract area was +57% to 28.7 million square meters compared to the same period last year. At the stage of industry consolidation, the company preserved development potential through the transformation of real estate-related industries.
The pressure on interest-bearing debt continues to fall, and stocks are being revitalized to cope with financial pressure
At the end of the period, the company's interest-bearing debt was 91.9 billion yuan, -20% year-on-year. The structure is dominated by bank loans, accounting for 75.5%, and there is still a credit limit of 168 billion dollars from banks. The pressure on short-term debt is quite obvious. The amount of interest-bearing debt maturing within one year reached 41 billion dollars. As of March 15, the amount of current corporate bonds due this year was 9.1 billion, and 1.115 billion dollars matured on March 22 and 24, respectively. The next peak of repayment was May-June (3.5 billion) and 11-12 (3 billion) at the end of the year. The company faced some financial pressure during the downturn in the industry boom cycle, but it is also actively revitalizing its stock. In December 2023, the company announced the transfer of 51% of the shares in the Shenzhen Huanwan City Project to Futian Investment Control, with a transaction consideration of 3.25 billion yuan to ease financial pressure.
Risk warning: Risk of declining industry sales; falling bond prices put pressure on the company's cash flow.