On March 27, 2024, the company announced its 2023 results: achieved revenue of 4.98 billion yuan, -0.51% year-on-year; realized net loss to mother of 951 million yuan, compared with net loss of 1,819 billion yuan in the same period of 2022.
The results in '23 fell short of expectations, and in '24 they unloaded their burdens and went to battle lightly. The company's revenue for 2023 was slightly lower than expected, mainly due to the company's withdrawal from some inefficient projects and a decline in the growth rate of the management area, which led to a slowdown in the growth rate of property management service revenue. Net profit attributable to mother is still in loss, mainly due to the company taking into account the latest business conditions of Jinke Group and once again making provision for impairment of its outstanding accounts receivable. As of the end of 2023, the net impairment loss on financial assets was approximately $1,471 billion. After this calculation, the company's receivables are mainly property fees from third-party small landlords, so the company's performance in 2024 is expected to increase lightly.
Improve the quality and efficiency of property management services, and increase collection rates. By the end of 2023, the company had 268 million square meters of management area, +5.14% year over year; contract area was 351 million square meters, -2.49% year over year.
In 2023, in order to improve operating efficiency and optimize the property portfolio, the company terminated the management area of 36 million square meters and terminated the contract area of 43 million square meters, all of which were higher than in 2022. In 2023, the collection rate of small property management service owners increased steadily by 3.1 pct to 91.2%, while the average property management fee unit price remained at 2.18 yuan per square meter per month (2.2 yuan per square meter per month in 2022).
Local lifestyle services have been restructured to focus on meal service as the second growth point. In 2023, the company's revenue from local lifestyle services was 514 million yuan, +5.3% year-on-year, of which revenue was 344 million yuan, +73.8% year-on-year, accounting for 67.0% of revenue, an increase of 26.4 percentage points over the previous year. The company regards meal service as the core business for future growth. Currently, it has established a differentiated multi-brand matrix, and superimposed property management to form a synergy effect. Property management service+group meal service won more than 10 joint bid projects during the year, and has strong competitiveness and market expansion capabilities.
Considering the full impairment of the company's receivables and the latest business conditions, we expect net profit from 2024-26 to turn a loss into a profit of 540 million yuan, 580 million yuan, and 620 million yuan respectively, with year-on-year growth rates of +7.6% and +6.8% respectively in 2025-26. Since the company has fully calculated the impairment of receivables for two consecutive years, it is expected to return to a steady growth trajectory and maintain a “buy” rating as various business adjustments are put in place this year. The current price of the company's stock (closing price on March 27) is 9.2x, 8.6x, and 8.0x for 2024-26 PE, respectively.
Food service development fell short of expectations; economic recovery fell short of expectations; expansion fell short of expectations.