Event: The company publishes its 2023 annual report. In 2023, the company achieved operating income of 465.739 billion yuan, down 7.56% year on year; net profit to mother was 12.163 billion yuan, down 46.39% year on year; basic earnings per share were 1.03 yuan/share, down 47.25% year on year. There will be no dividends in 2023.
Accrued impairment dragged down performance: The company achieved operating revenue of 465.739 billion yuan in 2023, a year-on-year decrease of 7.56%. The decline in revenue was mainly affected by a 9.6% year-on-year decline in development business settlement amounts. The company achieved net profit of 12.163 billion yuan in 2023, a year-on-year decrease of 46.39%. The reason for the large decline in net profit from revenue to mother is: 1) The company's gross profit margin of 15.23% in 2023, down 4.32pct from 2022, of which the gross profit margin of the development business is 15.7%, down 4.7pct from 2022, or due to overall sales pressure in the industry, starting when the settlement project is hot; 2) The impairment of assets accrued in 2023, and the accrued amount was 450 million yuan. The accrued impairment loss increased a lot based on market conditions and project sales Prepare.
In terms of cost control, the sales expense ratio and management expense ratio were 2.63% and 1.24%, respectively, an increase of 0.17 pct and a decrease of 0.66 pct from 2022. The overall cost ratio was 3.87%, down 0.49 pct from 2022, and the cost control was still effective.
Sales declined slightly: the company achieved a sales area of 24.66 million square meters in 2023, down 6.2% year on year; sales amount was 376.12 billion yuan, down 9.8% year on year; corresponding average sales price was 15,251 yuan/square meter, down 3.8% year on year. According to the volume of sales, the Shanghai region, the southern region, and the Beijing region respectively accounted for 34.2%, 23.7%, and 13.5% of the total sales amount, making them the three regions with the highest share.
Investment focus: The company added 43 new projects in 2023, with a total construction area of 5.96 million square meters and an equity construction area of 3.33 million square meters, corresponding equity ratio of 55.92%. The equity land price was 46.32 billion yuan, and the land acquisition intensity calculated based on the equity land price was 12.32%; the average floor price for land acquisition was 13,899 yuan/square meter, and the land to goods ratio calculated based on floor price/average sales price was 0.91. The new projects are mainly in major cities such as Beijing, Shanghai, Hangzhou, and Chengdu, and the quality of land acquisition is high. The company can sell a total of 68.505 million square meters of full-caliber soil storage. Not considering additional soil storage can support the company's development for 2-3 years. The company started and resumed work with an area of 17.063 million square meters, completing 102% of the plan at the beginning of the year; the company completed an area of 31.335 million square meters in 2023, completing 97.1% of the plan at the beginning of the year. In 2024, the company plans to resume construction with an area of 10.718 million square meters and a completed area of 22.57 million square meters, a decrease of 37.19% and 29.61%, respectively, compared with the actual completed area in 2023.
Financial stability: The company strictly controlled leverage: as of the end of 2023, the company's net debt ratio was 54.7%, and the balance ratio excluding advance payments was 65.5%; the interest-bearing debt structure remained healthy. As of the end of 2023, debt maturing within one year was 62.42 billion yuan, accounting for 19.5% of the total interest-bearing debt; the average debt period was 5.14 years, an increase of 0.35 years over the previous year; sufficient cash on hand. As of the end of 2023, the short-term cash flow ratio was 1.6 times that of 3.91 billion yuan. 2015 was positive; financing costs declined; the comprehensive cost of new domestic financing in 2023 was 3.61%, down 27 bps from 2022; financing channels were smooth; additional domestic and overseas financing amounts were 76.6 billion yuan and 13.1 billion yuan respectively in 2023.
Operating business goes hand in hand: 1) Logistics and warehousing: The company's logistics business achieved operating revenue of 4.18 billion yuan in 2023, with a year-on-year increase of 17.2%, including cold chain revenue of 1.88 billion yuan, an increase of 33.9%; the company opened 8 new logistics projects in 2023, with a leasable area of 439,000 square meters, and a total leasable floor area of 1.02 million square meters for projects opened by the end of 2023. 2) Rental housing: The company's “Parking House” is the largest centralized apartment provider in the country. The rental housing business achieved revenue of 3.46 billion yuan in 2023, an increase of 6.8% over the previous year. 22,800 new rooms were added in 2023, a net increase of 13,500 new units were opened. By the end of 2023, 233,000 rental housing units had been operated and managed, with a total of 180,000 units opened, with a business layout in 31 cities across the country. 3) Commercial operations: The company's business achieved revenue of 9.11 billion yuan, an increase of 4.6% over the previous year, of which commercial projects managed by Printing Power had revenue of 5.7 billion yuan, an increase of 4.1%; 15 new projects were opened in 2023; by the end of 2023, the company had opened a total of 203 projects (excluding asset-light projects), with a construction area of 1.58 million square meters, and commercial construction under construction; among the commercial projects operated by the company, the four first-tier cities accounted for 24%, and the first and second tier cities accounted for more than 90%. Deeply cultivate core cities. 4) Property services: Wanwuyun, a subsidiary of the company, achieved operating revenue of 33.42 billion yuan, an increase of 10.2% over the previous year; by the end of 2023, a total of 621 Diecheng chassis had been built and 319 new residential property projects were added; through process transformation and operation optimization, Diecheng achieved efficiency improvements, driving the overall gross margin of residential properties to increase by 3.5 pct.
Investment advice: The company's 2023 performance was hampered by development settlements and impairment effects. Under overall pressure on the industry in 2023, the company's sales declined slightly, investment remained cautious, focusing on core cities; strictly controlled leveraged financing channels were smooth, finances remained stable; and all operations grew. Considering the overall pressure on the industry and the drag on the company's 2023 performance, we adjusted the company's 2024-2025 net profit forecast and added the 2026 forecast. We expect the company's 2024-2026 net profit of 12.205 billion yuan, 12.413 billion yuan, and 12.755 billion yuan, EPS of 1.02 yuan/share, 1.04 yuan/share, and 1.07 yuan/share. The corresponding PE is 9.03X, 8.88X, and 8.64X, maintaining the “recommended” rating.
Risk warning: the risk that the macroeconomy falls short of expectations, the risk of large fluctuations in housing prices, the risk that policy implementation falls short of expectations, and the risk that the company's sales settlement falls short of expectations.