Core views

The company achieved operating income of 3.30 billion yuan in 2023, an increase of 24.3% over the previous year; achieved net profit of 970 million yuan, an increase of 30.8% year on year. The performance continued to grow at a high rate of 30.4%. The company's Xintuo's order growth rate is strong. The total construction area of Xintuo's contract construction project in 2023 was 35.3 million square meters, up 25.0% year on year, and the estimated construction cost of the new development project was 10.37 billion yuan, up 20.5% year on year; the market share of the contract construction industry in 2023 was 20.4%, maintaining the leading position in the industry for 8 consecutive years. The company's dividend payout ratio reached 100% in 2023, and full dividends were paid for two consecutive years from 2022 to 2023. The dividend rate calculated at the latest closing price reached 9.5%, and the level of shareholder feedback remained high.

occurrences

The company announced its 2023 annual results. In 2023, it achieved operating income of 3.30 billion yuan, an increase of 24.3% over the previous year, and realized net profit of 970 million yuan, an increase of 30.8% over the previous year.

Brief review

Performance has maintained high growth, and the level of cost control has improved. In 2023, the company achieved operating income of 3.30 billion yuan, an increase of 24.3% over the previous year; achieved net profit of 970 million yuan, an increase of 30.8% year on year. The performance continued to maintain high growth. The compound net profit growth rate in 2020-2023 reached 30.4%. The company's gross margin remained stable, at 52.2% in 2023, down 0.1 percentage points from the previous year. The performance growth rate was greater than the revenue growth rate, mainly due to the decline in the expense ratio. The company's sales expenses ratio in 2023 was 3.2%, down 1.3 percentage points from the previous year; the management expenses ratio was 15.6%, down 2.8 percentage points from the previous year.

The growth rate of Xintuo's orders is strong, and the leading position of Daijian is stable. In 2023, the total construction area of the company's Xintuo Construction Project was 35.3 million square meters, an increase of 25.0% over the previous year. The estimated construction cost of the Xintuo Construction Project was 10.37 billion yuan, an increase of 20.5% over the previous year. State-owned enterprises and CITI clients provided major support for Xintuo. State-owned enterprises and urban investment businesses, financial institution businesses, innovative government businesses, and private enterprise businesses accounted for 64.5%, 10.2%, 17.8%, and 7.5% of the total construction of new development projects throughout the year. According to statistics from the China Index Institute, the company's market share in the contract construction industry in 2023 was 20.4%, maintaining the leading position in the industry for 8 consecutive years. The company and the China Housing Association jointly established the Construction Branch of the China Real Estate Industry Association and led the editor-in-chief of the first contract construction industry standard.

100% dividends were paid for 2 consecutive years. The company announced a final dividend of 0.4 yuan per share and a special dividend of 0.1 yuan per share. The dividend ratio reached 100%. The full dividend will be paid for 2 consecutive years from 2022 to 2023. The dividend rate calculated at the latest closing price reached 9.5%, and the level of shareholder feedback remained high.

Raise the profit forecast and keep the purchase rating and target price unchanged. We forecast the company's 2024-2026 EPS to be 0.61/0.77/0.95 yuan (the original forecast 2024-2025 EPS would be 0.61/0.76 yuan). The company maintained its leading position in the contract construction industry, maintained high growth in performance and Xintuo orders, continued to vigorously give back to shareholders, and maintained the purchase rating and target price of HK$9.51.