Introduction to this report:
Influenced by the industry, the gross margin of the company's property sales business was briefly pressured in 2023, and it is expected that the market will gradually stabilize; the company's market share in 40 cities will gradually increase, consolidating its advantages as a brand central enterprise deeply involved in third- and fourth-tier cities.
Summary:
The company's 2023 performance is in line with expectations, continues to cultivate leading cities in the third and fourth tier, and maintains an increase in holdings rating. In 2023, the company's revenue was 56.4 billion yuan (RMB, same below), and net profit to mother was 2.3 billion yuan, down 1.9% and 26.9%, respectively. Considering that the industry is still in the recovery period, the 2024-2025 EPS was adjusted to 0.66 yuan, 0.68 yuan (originally 0.78 yuan, 0.82 yuan), and the 2026 EPS was added to 0.73 yuan, maintaining the shareholding rating.
The company's market share in the layout city is steadily increasing, and there are sufficient saleable resources, which will support subsequent operations. As many leading housing enterprises shift their layout focus to safer Tier 1 and 2 cities, the company's competitive advantage in the 40 low-energy cities with a core layout is highlighted. In 2023, sales volume bucked the trend and rose 6.2% year on year. Among them, 45% of the cities achieved sales volume in the top three, and 18% of the cities had the highest market share in the local market. At the same time, as of the end of 2023, the company had 18.81 million square meters of land reserves, with an equity ratio of 83%. Based on the average sales price in 2023 and the average sales amount from 2021 to 2023, the corresponding goods value is 228 billion yuan. The removal cycle is about 4.4 years, and the overall reserves are abundant.
Affected by continuous adjustments in the real estate market, the company's gross margin bottomed out to 11.2%, and will improve as the market gradually stabilizes. In 2023, the company's gross margin fell 3.2 pct to 11.2% year on year, and net profit margin fell 1.4 pct to 4.1% year on year. The decline in gross margin was mainly due to the property sales business, which accounted for up to 99.4% of revenue. The gross margin of this business fell 3.1 pct to 11.1% year over year due to the market. Considering that optimization policies are gradually being implemented, gross margin expectations bottomed out. In addition, the company has leading delivery capacity. In 2023, the scale under construction exceeds 19 million square meters, the delivery area is 7.37 million square meters, and the number of units delivered is nearly 47,000.
The company's balance ratio has gradually declined since 2021, and its finances have remained stable. In 2023, the company's balance ratio fell further by 4 pct to 75% year on year, which is at an excellent level; the company's net debt ratio fell 2.8 pct to 46% year on year, the weighted average financing cost during the year was 4.6%, and the company issued a total of 4 billion yuan of corporate bonds in 2023. The average financing cost was advantageous, about 3.7%.
Risk warning: Housing prices and demand continue to decline sharply, and the market competition pattern worsened as other brands of central enterprises entered the low-energy market.