Steady operation to deliver high-quality dividends. In 2023, the company achieved revenue of 134,430 million yuan, +34.9% year-on-year. Among them, the company's property development business revenue was 96648 million yuan, accounting for about 96.80% of total revenue. As of December 31, 2023, the company achieved gross profit and net profit attributable to mother of 14,917 million yuan and 5035 million yuan, respectively, of +2.0% and +2.1% year-on-year; gross margin and net interest rate to mother were 11.10% and 3.75%, respectively, a slight decline from the same period in 2022; basic income per share was 2.61 yuan/share. The board of directors recommended a final dividend of HK$1.3 per share, with a dividend rate of about 52%, an increase of 6 percentage points over the previous year, and a dividend rate of about 10%.
Sales are in the top ten in the industry, and inventory monetization capabilities are strengthened. In 2023, the company achieved a full-caliber amount of 188.9 billion yuan, +12% over the same period; the equity contract amount was 138 billion yuan, +14% year over year, and the sales equity ratio was about 73%. According to the sales performance ranking of the top 100 real estate companies in Kerui, the company ranked 8th in the list for full-caliber sales in '23. As of December 31, 2023, the total construction area of the company's equity sales was 6.664 million square meters, +9.3% over the same period in 2022. In terms of repayment, the company's full-caliber repayment rate for the full year of 2023 was as high as 98%, an increase of 2 percentage points over 2022; full-caliber repayment can cover 2.2 times the interest-bearing debt, and the margin of safety is high.
Qualitative storage, with both liquidity and profitability. In 2023, the company added 78 new lots of high-quality land. The amount of full-caliber land acquisition and full-caliber land acquisition value were 116.9 billion yuan and 218 billion yuan respectively, +42% and 48% year-on-year respectively, and the land acquisition equity ratio was 73%. Among them, various projects such as Hangzhou Yunqizhijiang, Ningbo Puyun, and Longyan Yangxi achieved land acquisition and liquidation within the year. As of December 31, 2023, the company has 311 projects in China. The total saleable area of land reserves is about 15.52 million square meters, the value of goods is about 266.8 billion yuan, the land storage equity ratio is 76%, and the share of first-tier and second-tier cities is as high as 84%.
Good liquidity, safe and healthy finances. As of December 31, 2023, the company's cash on hand was 54161.32 million yuan, with a net debt ratio of 33.6%, down 19 percentage points from the previous year; the average financing cost for existing interest-bearing liabilities was about 3.75%, down 58 b.p. year-on-year. We believe that the company's financing policy is prudent, the cash flow is sufficient to maintain a good capital structure, and the overall finance is safe and healthy.
Investment advice. Maintain an “better than the market” rating. Considering that C&D International's parent company has an excellent background, steady development of various types of businesses, and land value will be further released in the future, we predict that the company will have an EPS of $2.42 in 2024, giving the company a PE valuation of 8-10 times in 2024. The corresponding market value range is HK$401-50.2 billion, and the corresponding reasonable value range is HK$21.17-26.46 per share. (Not specified in this article; all prices are in RMB, 1 HKD = 0.92 RMB).
Risk warning: 1) The growth rate of the total number of new homes in the real estate industry is at risk of shrinking; 2) Market recovery falls short of expectations.