Matters:
The company announced its 2023 annual report. It achieved annual revenue of 15.63 billion yuan, a year-on-year increase of 20%, net profit to mother of 740 million yuan, an increase of 24% over the previous year, and plans to distribute a cash dividend of 1.70 yuan (tax included) for every 10 shares.
Ping An's point of view:
Revenue and profit grew steadily, and gross margin fluctuated slightly: in 2023, the company achieved operating income of 15.63 billion yuan, an increase of 20% year on year, and net profit to mother of 740 million yuan, an increase of 24% year on year. Among them, property management business revenue was 14.76 billion yuan, up 18% year on year, asset management business revenue was 700 million yuan, up 50.1% year on year, and revenue from other business (surplus real estate disposal) was 170 million yuan, up 209.8% year on year. The comprehensive gross margin for the period fell slightly by 0.3 percentage points year on year to 11.6%. Among them, the gross margin of the property management business fell slightly by 0.6 percentage points and 10% year on year; the management expenses ratio increased slightly by 0.3 percentage points year on year to 3.9% year on year.
The quality of property management has improved, and mergers and acquisitions have achieved remarkable results: at the end of 2023, the company had 2101 projects under management, covering 156 cities across the country, and the management area rose to 345 million square meters; of these, the third party managed an area of 225 million square meters, accounting for 65.4%, and 213 million square meters of non-residential management area, accounting for 61.9%. A new annual contract amount of 4.04 billion yuan was signed throughout the year, an increase of 22% over the previous year. Market expansion increased during the year. Third-party projects signed a new annual contract amount of 3.54 billion yuan (more than half of the 10 million level projects), an increase of 27.4% over the previous year; the non-residential sector signed a new annual contract amount of 3.46 billion yuan, an increase of 28.7% over the previous year. The merger and acquisition units achieved remarkable results from integration to integration. During the period, the four mergers and acquisitions achieved a total operating income of 1.42 billion yuan, and the total annual contract amount for newly signed projects was 190 million yuan.
The platform added value and expanded steadily, and commercial operations expanded steadily: in 2023, the three core business lines of the Jiahui Cloud Platform enterprise store, personal store, and resource operation worked together. Among them, the enterprise mall built an easy to buy service brand, undertook the operation of the China Merchants Group catalog procurement platform, and also provided procurement services for non-resident project customers, such as office products and industrial products, with sales exceeding 560 million yuan during the period. At the end of 2023, the number of commercial projects managed by the company rose to 70 (including preparatory projects), with a management area of 3.97 million square meters, including 3 self-owned projects, 58 projects entrusted to manage China Merchants Shekou (Hangzhou Linping Garden City, Chengdu Jinniu China Merchants Garden City, Ganzhou China Merchants Center, etc.), and 9 third-party brand export projects; the total leasable area of owned properties was 469,000 square meters, with an overall occupancy rate of 96%.
Investment advice: Maintaining the original forecast, the company's 2024-2025 EPS is expected to be 0.82 yuan and 1.02 yuan respectively, adding the 2026 EPS forecast to 1.18 yuan. The PE corresponding to the current stock price is 13.6 times, 10.9 times, and 9.4 times, respectively. As a leader in property management in central enterprises, the company has outstanding advantages in resource endowments and market-based expansion, and has strong comprehensive service capabilities in multiple business formats. It is expected to benefit from the restructuring of the industry pattern and continuous positive development, and maintain a “recommended” rating.
Risk warning: 1) Real estate restoration falls short of expectations Risk: If real estate restoration falls short of expectations, it will limit the development space of the property industry and put pressure on the company's operations; 2) Industry competition will increase the risk: in the stock era, property enterprises will drive market-based expansion into an inevitable trend. Excessive competition will put pressure on the company's business development and the risk of declining operating profits; 3) the risk of business development such as value-added services and commercial operations falling short of expectations.
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