Revenue in '23 was +12% YoY, and net profit to mother was +10% YoY, slightly exceeding expectations, and the dividend rate increased. In 2023, the company's revenue was 202.5 billion yuan, +12.3% year over year; net profit to mother was 25.61 billion yuan, slightly exceeding market expectations; core net profit to mother was 23.65 billion yuan, -3.2% year over year; basic earnings per share were 2.34 yuan, +10.1% year over year; gross margin and net income to mother were 20.3% and 12.6%, respectively, year-on-year, -1.0pct and -0.3pct, respectively. The sales and management expenses rate was only 3.4%, -0.2pct year-on-year. The increase in the company's performance is mainly due to: 1) the increase in the company's carry-over scale; 2) the 22-year property inventory impairment reserve of 1.52 billion yuan, and the joint venture depreciation of 1.33 billion yuan. There was no such impairment in the same period this year. By the end of '23, the company had sold an uncarried amount of 237.3 billion yuan, compared to -3.3% at the end of '22. The uncarried amount sold could cover 1.2 times the revenue for 23 years, helping to stabilize the company's subsequent performance. In addition, the company plans to pay a final dividend of HK45 cents per share, for a total annual dividend of HK80 cents, accounting for 33% of the core net profit to mother, compared to +2pct in '22.
Sales in '23 were 309.8 billion yuan, +5% year-on-year, focusing on the core tier 1 and 2, and the planned sales target for '24 is rising steadily. In 2023, the company's sales amount was 309.8 billion yuan, +5.1% year over year; sales area was 13.36 million square meters, -3.7% year over year; average sales price was 23,200 yuan/square meter, +9.1% year over year. In '23, the company's overall sales payback rate reached 99%, +6pct compared to the previous year, and the sales payback rate remained high. The eastern, southern, northern and other regions accounted for 13.8%, 16.6%, 29.4%, and 40.2% of sales, respectively; the company focused on key cities, with first-tier cities accounting for 38% of sales, strong second-tier cities accounting for 36%, and first-tier and second-tier cities accounting for 74% of total sales.
In 2024, the company expects the saleable value to reach 702.4 billion yuan. The target sales amount for 24 years is rising steadily. Under industry adversity, the company's sales target will remain positive throughout the year.
The intensity of land acquisition reached 46% in 23, focusing on Tier 1 and 2 core cities, and the 23-year land acquisition investment plan remained steady. In 2023, the total amount of land acquired by CNOOC companies was 144 billion yuan, or +19%, corresponding to a value of 264 billion yuan; the company's own land acquisition amount was 134.2 billion yuan, +21% over the same period, corresponding to the land acquisition value of 244 billion yuan; the ratio of land acquisition amount/sales amount was 46%, and the ratio of land acquisition amount/value of goods was 55%. Among them, first-tier, second-tier, and other cities accounted for 62.4%, 29.7%, and 7.9% of the land acquisition amount respectively. First-tier and second-tier land acquisition amounts accounted for 92%, and the land acquisition value accounted for 92%. Land acquisition focused on core high-energy cities. By the end of '23, the company had a total land reserve of 54.03 million square meters; of which, excluding CNOOC Hongyang, the total land reserve was 35.22 million square meters, and the equity area was 30.39 million square meters; the company had sufficient land reserves and a high-quality structure. Furthermore, in 2024, the company plans to increase the land rights investment budget to remain steady.
The three red line indicators maintain the green level, and financing costs are low, helping the company to buck the trend and expand positively. On the financial side, in 23 years, the company's average financing cost was only 3.55%, which is at the best level in the industry. By the end of '23, after excluding advance payments, the company's balance ratio and net debt ratio were 51.8% and 38.7%, respectively. The short-term cash debt ratio was 2.1 times, and the three red line indicators maintained the “green tier” to help steady development. In 23 years, the company's commercial revenue was 6.36 billion yuan, +20.9%; the total commercial operation and management scale was 10.14 million square meters, 98% of the core area of Tier 1 and 2 cities; the scale of light asset management reached 1.5 million square meters, and 93% was located in the core area of Tier 1 and 2 cities; of commercial revenue, office buildings, shopping centers, apartments and hotels accounted for 54%, 26%, 3%, and 17% respectively. Furthermore, in 2024, the company plans to increase revenue from commercial operating properties by +25% year-on-year, which is a positive target.
Investment analysis opinion: double-digit growth in performance, steady increase in sales, active land acquisition, and maintenance of the “buy” rating. China and overseas operations are steady, land reserves are abundant, and the structure is high quality. It focuses on the three major metropolitan areas and Tier 1 and 2 cities. As a “green” housing enterprise, the company has excellent financial indicators and financing costs are at a first-class level in the industry. Under supply-side reforms, this will give the company more sustainable and broad development space. Considering the downturn in the industry, we slightly lowered the company's 2024-25 earnings forecast to 2.41 and 2.53 yuan (originally 2.56, 2.89 yuan), and introduced a 2026 earnings forecast of 2.67 yuan per share. Currently, the 24-year PE is only 4 times, maintaining a “buy” rating.
Risk warning: Industry regulation policies have been tightened beyond expectations, corporate settlement profit margins have declined beyond expectations, and sales elimination rates have fallen short of expectations.