On March 26, 2024, the company announced its 2023 annual results announcement. It achieved annual revenue of 80.22 billion yuan, +10.8% year on year; realized net profit of 3.19 billion yuan, -19.4% year on year; paid 0.347 yuan per share for the whole year, with a dividend ratio of 40.6% (net profit to mother), and a dividend ratio of about 8.7%.
The decline in gross margin led to a decline in net profit attributable to mother: in 2023, the company's real estate development, property management, and property rental income all increased year on year, while the main reasons for the overall decline in net profit due to the real estate market were: ① Affected by the real estate market, the company's gross profit margin was 15.3%, down 5.1 pct from 2022, and gross profit fell 17.2% year on year; ② changes in the fair value of investment properties caused a loss of 1,348 million yuan, generating revenue of 211 million yuan in the same period last year.
The sales scale continues to grow, and the Guangzhou market is at the top of the list: the company's contract sales amount in 2023 was 142 billion yuan, +13.6% year over year (TOP30 real estate companies average -18% year over year), ranking 12th in the industry (16th in 2022); achieving 107.6% of the 2023 sales target. In 2023, the Greater Bay Area contract sales amount was 71.6 billion yuan, +20.0% year over year, of which Guangzhou's contract sales amount was 61.3 billion yuan, +15.3% year over year, with a single city contributing 43.2%. According to the China Index data, it ranked first in the Guangzhou sales list.
Investment focuses on core cities and supplements high-quality soil storage through multiple channels: In 2023, the company added 28 new projects (10 first-tier and 18 second-tier) in 11 cities including Guangzhou, Beijing, and Shanghai through a “6+1" diversified storage growth model, with a total construction area of 4.91 million square meters and an additional saleable value of about 130 billion yuan. 53% of the land was acquired through TOD and urban renewal channels, and the Hangzhou Xinqiao TOD project was obtained. It was the company's second TOD project outside of Guangzhou; it obtained the first urban renewal project in Hongkou District of Shanghai, with a total sales value of about 3 billion yuan.
The financial situation is safe and stable, and financing costs continue to decline: By the end of 2023, the company's three red line indicators remained in the green category. The balance ratio, net debt ratio, and short cash debt ratio after excluding advance payments were 67.4%, 57.0%, and 2.01 times, respectively. Domestic corporate bonds of 6.9 billion yuan were issued throughout the year, with a weighted ratio of 3.37%. The weighted financing cost for total interest-bearing debt was 3.82%, down 34 BP from 2022.
The company's sales are growing steadily, and the land acquisition channels are abundant and unobstructed. It is expected that future performance will continue to grow. Considering the downward market pressure on gross margin, we adjusted the company's 2024/2025 net profit to 35.7/3.93 billion yuan (originally 47.1/5.65 billion yuan), and added the 2026 net profit forecast of 4.31 billion yuan, with year-on-year growth rates of 12.0%, 10.3%, and 9.6%, respectively. The current price of the company's stock is 4.6/4.1/3.8 times the PE valuation, maintaining a “buy” rating.
Policies are not boosting the market well; the Guangzhou market continues to decline; other housing companies have defaulted.