The Zhitong Finance App learned that CICC released a research report saying that maintaining the “outperforming industry” rating of Midea Real Estate (03990), profit in 2023 fell 48% year on year, in line with market expectations, and the target price was HK$6.1. According to Kerry, the company's 2023 overall caliber and equity sales rankings ranked 2/5 compared to 2022 to 22/22. The company plans to supply about 110-120 billion yuan for the full year of 2024 (about 70 billion yuan in rollover), and the annual sales target is about 55-60 billion yuan. The bank believes that the company will continue to optimize its stock soil storage structure. In addition, a solid financial situation will also help support the company to take opportunities to supplement high-quality supplies, and the 2024 sales ranking is expected to continue to be maintained.

The report's main points are as follows:

Build a higher margin of financial security.

Thanks to efficient repayments and restraint in land acquisition, the company's deducted debt ratio and net debt ratio fell 0.9 and 8.1 percentage points year-on-year to 67.3% and 35.8%, respectively, and the short-term cash loan ratio (excluding restricted cash) was 1.4 times. As an exemplary private enterprise, the company is supported by regulators and exchanges on the financing side. In 2023, it issued a total of 4.62 billion yuan in votes, with a weighted average interest rate of 4.39% (and issued 1.44 billion yuan in January this year, with a coupon interest rate of 4.96%). The average financing cost remained low at 4.8% at the end of 2023. In terms of debt maturity, the company has not issued US dollar bonds. Domestic bonds are only 900 million yuan actually maturing and 5.4 billion yuan resale due in 2024 (1.95 billion yuan has been paid as scheduled up to now). The bank believes that the maturing pace of the company's open market debt is stable.

Continuously optimize the soil storage surface.

The company began optimizing the stock soil storage structure in the second half of 2021 to cut shares in stock projects while speeding up the removal of low-energy urban assets. Up to now, the company has acquired shares in 21 high-quality projects and also removed shares in 24 low-energy city projects, resulting in a net increase of 6.6 billion yuan in the corresponding equity value. In 2023, the company also obtained 5 high-quality plots in core cities such as Guangzhou, Changsha, and Foshan, corresponding to an additional value of 7 billion yuan. The bank estimates that the gross profit margin of the new projects will be more than 20% and the IRR of about 25%. By the end of 2023, the company's land storage value equity ratio was the same as 66% at the beginning of the period. About 80% were located in Tier 1 and 2 cities, and about 50% in the Yangtze River Delta and Greater Bay Area. The bank estimates that the company's current unsold goods are worth about 250 billion yuan, which can support development for the next three years.