There has been a decline in revenue and profit. The company's total revenue in 2023 was 181,094 billion yuan, down 27.8% year-on-year.
Gross profit was RMB 30.58 billion, down 42.3% year on year, while core profit attributable to mother excluding changes in fair value was RMB 11.35 billion, down 49.6% year on year. The company's gross profit margin in 2023 was 16.9%, down 4.3 percentage points from 2022; core profit margin after tax (after excluding assessed value-added) was 8.7%, down 3.6 percentage points from 2022; profit after tax due to mother (profit margin after core equity) was 6.3%, down 2.7 percentage points from 2022. According to the company's annual results announcement, the board of directors of the company plans to pay a final dividend of 0.23 yuan per share, plus an interim dividend of 0.32 yuan, for a total annual dividend of 0.55 yuan per share. The company's dividend rate is 5.61% based on the closing price of March 25.
Property development is under pressure, supported by physical investment management. Property development revenue in 2023 was $155.86 billion, down 31.3% year on year, accounting for 86.2% of total revenue; total construction area of delivered property was 10.808 million square meters, settlement gross margin was 11.0%, average price was 14,555 yuan per square meter; property investment income (excluding tax) was 12.94 billion yuan, up 8.9% year on year, accounting for 7.2% of total revenue, up 2.5 percentage points from 2022; gross operating margin was 75.9%, up 0.3 percentage points from 2022; property management and related services Revenue (excluding tax) was $11.94 billion, up 2.4% year on year, accounting for 6.6% of total revenue, up 1.9 percentage points from 2022, and gross margin was 31.0%, up 2 percentage points from 2022.
Operating cash flow was positive, and borrowing pressure was reduced. In 2023, the company achieved positive operating cash flow as a whole. In 2023, the company successfully issued 2.3 billion yuan of medium-term notes in China, with a face interest rate of 3.50%-3.70%, and a period of 3 years. By the end of 2023, the company's comprehensive loan ratio was 192.65 billion yuan, the net debt ratio was 55.9%, the average loan cost was 4.24%, and the average loan period was 7.85 years; the company's cash in hand was 60.42 billion yuan, and the short cash-to-debt ratio excluding pre-sale supervision funds and restricted funds was 1.36 billion yuan. The company's credit ratings are BBB- (Standard & Poor's), Ba1 (Moody's), BBB- (Fitch), and AAA (China Integrity, New Century).
The quality of land reserves has been improved, and new soil storage focusing on high energy levels has been added. By the end of 2023, the company's total land reserves were 45.39 million square meters, and the equity area was 32.36 million square meters. The average cost was 4,705 yuan per square meter, or 29.3% of the current contract unit price. According to regional analysis, land reserves in the Bohai Rim region, western region, Yangtze River Delta region, central China region and South China region account for 33.1%, 25.3%, 16.7%, 13.8%, and 11.1% of the total land reserve area, respectively.
Investment advice: Maintain an “better than the market” rating. We forecast the company's EPS in 2024 to be approximately RMB 2.05. We give the company a PE valuation of 6-7 times in 2024, corresponding to a reasonable value range of RMB 12.29-14.34 (HK$13.36-15.59) per share.
Risk warning: Industry sales are facing downward pressure.