Core views

In 2023, the company achieved revenue of 134.4 billion yuan, a year-on-year increase of 34.9%, achieved net profit of 5.03 billion yuan, an increase of 2.0% over the previous year, and achieved steady growth in performance. The company's revenue growth rate is higher than the performance growth rate mainly due to the decline in gross margin and the increase in minority shareholders' equity. In 2023, the company paid HK$1.3 per share, with a dividend rate of 52%. Based on the closing price on March 21, 2024, the dividend rate reached 10.1%, which is a significant investment value. In 2023, the company achieved sales volume of 188.9 billion yuan, an increase of 11.7% over the previous year, and sales recovered significantly.

The amount of land acquired was 116.9 billion yuan, an increase of 41.9% over the previous year. The intensity of land acquisition was 61.9%, an increase of 13.2 percentage points over the previous year. The company acquired a total of 88.6 billion yuan of land in the core 10 cities, accounting for 75.8%, and continued to cultivate in the core cities.

occurrences

The company announced its 2023 results, achieving revenue of 134.4 billion yuan, a year-on-year increase of 34.9%, and net profit to mother of 5.03 billion yuan, an increase of 2.0% over the previous year.

Brief review

The company's performance has maintained steady growth, and dividends have been actively returned to shareholders. In 2023, the company achieved revenue of 134.4 billion yuan, a year-on-year increase of 34.9%, achieved net profit of 5.03 billion yuan, an increase of 2.0% over the previous year, and achieved steady growth in performance. The company's revenue growth rate was higher than the performance growth rate mainly due to: 1) the company achieved a gross profit margin of 11.1% in 2023, down 4.2 percentage points from the previous year; 2) minority shareholders accounted for 20.5% of profit and loss in 2023, an increase of 9.2 percentage points over the previous year. In 2023, the company paid HK$1.3 per share, with a dividend rate of 52%. Based on the closing price on March 21, 2024, the dividend rate reached 10.1%, which is a significant investment value.

Sales have recovered significantly, and cash is king. In 2023, the company achieved sales volume of 188.9 billion yuan, an increase of 11.7% over the previous year, and sales recovered significantly. The company insists on deepening its core cities. Sales in Tier 1 and 2 cities account for 85%. Sales in Xiamen, Hangzhou, Shanghai, Suzhou, and Beijing all surpassed 10 billion dollars, and entered the top 10 local sales in 46 cities. At the same time, the company achieved high-quality sales, with a repayment amount of 184.3 billion yuan in 2023, and a repayment rate of 98%.

Actively acquire land and expand core cities. The amount of land acquired by the company in 2023 was 116.9 billion yuan, up 41.9% year on year. The intensity of land acquisition was 61.9%, an increase of 13.2 percentage points over the previous year. The total amount of land acquired by the company in the 10 core cities was 88.6 billion yuan, accounting for 75.8%. By the end of 2023, the company's total land storage area was 15.52 million square meters, of which 84% were located in Tier 1 and 2 cities, and 16% were in Tier 3 and 4 cities, mainly in Fujian and Jiangsu and Zhejiang regions. The soil storage quality is excellent, which will help ensure steady growth in future sales.

Lower the profit forecast and keep the purchase rating and target price unchanged. We forecast the company's EPS for 2024-2026 to be 2.66/2.99/3.54 yuan (the original forecast was 4.77/5.79 yuan for 2024-2025). The company's sales and land acquisition remain strong, and it is expected to stand out from changes in the industry pattern. At the same time, the company currently has significant high dividend characteristics and significant investment value, keeping the purchase rating and target price of HK$36.88 unchanged.

Risk warning: 1. In terms of sales, the market is currently in a stage of weak recovery, and the degree of recovery in some cities is weak. The company maintained a high level of land acquisition intensity in the early stages. If the urban layout and recovery of Chengdu falls short of expectations, it is likely that the expected price at the time of land acquisition cannot be achieved, thus further affecting subsequent performance. 2. In terms of layout, the company's land acquisition layout is concentrated in the Haixi region, especially in Fujian Province. Although as the company's base, the company has a local advantage with its high-quality products and brand recognition, relying too much on the single market will make it impossible for risks to be scattered. In the future, we need to continue to pay attention to the Fujian market situation. 3. In terms of carry-over, the company currently has plenty of carry-over resources, but project progress is uneven. If delivery is delayed in some cities, it may cause the company's carry-over to fall short of expectations, which in turn affects the realization of the company's revenue and profit.