Performance is under pressure, and dividends are stable. In 2023, the company achieved operating income of 80.2 billion yuan, a year-on-year increase of 10.8%; net profit to mother of 3.2 billion yuan, a year-on-year decrease of 19.4%; and core net profit of 3.5 billion yuan, a year-on-year decrease of 17.5%.
The increase in the company's revenue and lack of profit was due to the gross settlement margin of about 15.3%, down 5.1 pct from the previous year, and losses of 1.35 billion yuan due to changes in fair value. The company's final dividend was RMB 0.134 per share, and the annual dividend was RMB 0.347 per share, accounting for about 40% of the core net profit. The dividend ratio remained stable.
Sales increased 13.6%, and the soil storage structure remained high quality. In 2023, the company achieved a sales area of 4.45 million square meters, an increase of 7.5% over the previous year; achieved sales volume of 142 billion yuan, an increase of 13.6% over the previous year, and achieved 107.6% of the annual sales target. The company is a regional leader in Guangzhou, with annual sales of 61.3 billion yuan, up 15.3% year on year; the Greater Bay Area had annual sales of 71.6 billion yuan, up 20.0% year on year. In 2023, the company added a total of 28 plots of land in 11 cities through the “6+1" diversified storage growth model, with a total construction area of about 4.91 million square meters, equivalent to a saleable value of 130 billion yuan. All of the company's new land storage is located in first-tier and key second-tier cities, accounting for 53% of the increase in reserves through diversified and specialized channels such as TOD, industrial land acquisition, state-owned enterprise cooperation, and urban renewal. By the end of 2023, the company's total land storage was 25.67 million square meters, of which the Greater Bay Area accounted for 42% and Guangzhou accounted for 38%; East China, Midwest and North China together accounted for 58%, and the soil storage structure remained high quality.
The financial situation is stable and the debt structure is good. The company's financial level has always remained “green”. By the end of 2023, the company's balance ratio after excluding advance payments was 67.4%, the net debt ratio was 57.0%, and the short-term cash debt ratio was 2.0. The company's financing channels were unobstructed, and the total average borrowing cost was 3.82%, a decrease of 34 bps.
The company has a good debt structure, accounting for 22% of debts due within 1 year. Lower financing costs and unobstructed financing channels will continue to help the company obtain sufficient capital, so as to more calmly obtain high-quality land in the current market environment.
Risk warning: The decline in industry fundamentals has exceeded expectations, and policy warming has fallen short of expectations.
Investment advice: The company's financial health and stable dividend payments have achieved contrarian growth in sales against the backdrop of a declining market, while also maintaining a high-quality land storage structure. Considering the decline in gross margin and depreciation pressure brought about by the market downturn, we lowered the company's profit forecast. We expect the company's net profit to be 32/33 billion yuan (original value 46.51 billion yuan) for 2024-25, respectively, and earnings per share of 0.80/0.82 yuan, respectively. Corresponding to the current stock price PE, it is 4.8/4.6 times, respectively, to maintain a “buy” rating.