Introduction to this report:
The company released operating data for February. The development business continued to be under pressure from last month. Land acquisition investment was placed in advantageous cities; business restructuring was deepened, and non-development business was developing steadily.
Summary:
The company released operating data for February. The non-development business continued to operate steadily, and the sales performance of the development business was under pressure at the beginning of the year, maintaining an increase in holdings rating. In our report “Industry Resilience, Exceeding the Performance of Leading Real Estate Companies” released on March 18, 2024, we pointed out that judging from data from January to February, the pressure on leading housing enterprises with a national layout is currently stronger than that of the industry. The company's sales performance as a leading private enterprise is basically the same as that of the TOP50 housing enterprises, which is why the decline widened. However, according to Kerry's statistics, Xiaoyangchun, which already has sales markets in Nanjing, Shenzhen, Chengdu, etc., will closely track the company's sales performance in March. Maintain the company's 2024-2026 EPS at 1.93 yuan, 1.97 yuan, and 2.07 yuan, and maintain the shareholding rating.
The monthly sales volume in February ranked 10th in the industry, and the average sales price increased 14% from month to month after January. In February, the company's total contract sales amount was 5.8 billion yuan (RMB, same below), with a year-on-year sales area of 380,000 square meters, down 67% and 65% year-on-year respectively, and the declines were 32 pct and 44 pct wider than the previous month, respectively. In order to exclude the impact of the Spring Festival, it was further estimated that the cumulative total contract sales amount from January to February was 12.8 billion yuan, and the cumulative sales area was 910,000 square meters, down 55% and 48%, respectively, from the full year of 2023. In addition, the average sales price in February rose 14% month-on-month to 15,132 yuan/square meter, higher than the average sales price in the second half of 2023 (1,5003 yuan/square meter).
The company added 1 additional plot of land reserves, and the monthly land investment intensity was 9%. In February, the company added 1 new land reserve in Xi'an. The land area is about 20,000 square meters, the construction area is about 60,000 square meters, the equity accounts for 60%, the equity land price is about 300 million yuan, and the average unit price is 9434 yuan/square meter. According to China Index data, the company's sales in Xi'an ranked 2nd among real estate companies in 2023, and this new land acquisition will further strengthen the company's in-depth layout in dominant cities. Currently, the company's investment in land acquisition is low. The monthly land investment intensity is 9%, which is lower than the investment intensity for the full year of 2023 (23%).
The non-development business is developing steadily. The cumulative operating revenue from January to February rose 8% year on year, 2 pcts wider than the full year of 2023. It continues to reduce dependence on development business revenue and deepen business restructuring. As of the end of February, the company's operating revenue was 4.2 billion yuan (excluding tax, same below), of which operating revenue was about 2.3 billion yuan, accounting for 54%, and service revenue was about 1.9 billion yuan, accounting for 46%.
Risk warning: The decline in demand exceeded expectations, and the development of other transformation businesses fell short of expectations.