Core views
In 2023, the company achieved revenue of 1.03 billion yuan, up 17.0% year on year; net profit to mother was 98.835 million yuan, up 1.9% year on year. The performance growth rate was not as high as the revenue growth rate mainly due to climbing projects. The overall gross profit margin was 28.7%, a decrease of 11.9 percentage points, and a year-on-year increase in sales expenses. The company is deeply involved in steady operation in Shanghai. By the end of 2023, the company had 73 projects under management, 61 of which were located in Shanghai; the management area was 1.4 million square meters, an increase of 6.8% over the previous year. The company strengthened repayment management and increased the collection rate, and achieved a net operating cash flow of 640 million yuan for the full year of 2023, an increase of 10.6% over the previous year.
occurrences
The company released its 2023 annual report, and achieved operating income of 1.03 billion yuan in 2023, an increase of 17.0% over the previous year; realized net profit of 98.835 million yuan, an increase of 1.9% over the previous year.
Brief review
Revenue is progressing steadily, and profitability is under pressure. The company achieved operating income of 1.03 billion yuan in 2023, an increase of 17.0% over the previous year; net profit to mother was 98.835 million yuan, an increase of 1.9% over the previous year. The main reason why the net profit growth rate fell short of revenue: (1) Profitability was under pressure. The company's overall gross profit margin was 28.7%, down 11.9 percentage points from the same period last year, mainly due to the mergers and acquisitions in the current period. Among them, the gross profit margin of the leasing business was 26.5%, down 16.5 percentage points from the same period last year; the gross profit margin of property management and other businesses was 34.5%, an increase of 1.1 percentage points; (2) Sales expenses were 44.178 million yuan, up 29.5% year on year, corresponding sales expenses rate 4.3%, up 0.4 percentage points from the same period last year, mainly due to the increase in the company's labor costs.
Deeply cultivate the core layout in Shanghai, and continue to expand on a steady scale. By the end of 2023, the company had 73 projects under management, the same as last year; the area under management was about 1.4 million square meters, an increase of 6.9% over the previous year. Among them, the three major business models of leased operation, fiduciary operation, and shareholding operation were 42, 29, and 2 projects, respectively. The managed areas were 77, 52, and 100,000 square meters, respectively. The year-on-year changes were 8.5%, 8.3%, and -16.7%, respectively. From a regional perspective, the company is deeply involved in Shanghai. Of the management projects, 61 are located in Shanghai, and the remaining projects are located in the three core cities of Beijing, Hangzhou, and Nanjing. In addition to steady operation during the year, the company maintained the pace of external development, and Xintuo Beijing's “Tianning No. 1? Three projects: “Cross Border Jinyuan”, Shanghai's “Jinhe Cross Border Puhui Space Phase II”, and Shanghai's “Jinhe Cross Border Jing'an Space”.
Improved repayment management has achieved remarkable results, and operating cash flow has steadily increased. In 2023, the company strengthened repayment management, and the collection rate increased. By the end of 2023, the company's accounts receivable were 76.655 million yuan, down 11.6% year on year; net operating cash flow for the whole year was 640 million yuan, up 10.6% year on year.
The profit forecast was lowered, and the target price and purchase rating remained unchanged. We lowered the company's profit forecast. EPS for 2024-2026 was 0.23/0.26/0.28 yuan, respectively. Considering the recovery of consumption and the economy, the company's project rental rate is expected to bottom up, and the profitability of medium- to long-term projects will continue to improve after the climbing period. We kept our target price of 8.32 yuan and the purchase rating unchanged.
Risk analysis
1. The recovery in the domestic commercial market fell short of expectations, affecting the increase in the rental rate and rental income of the company's projects. There is some uncertainty about the overall growth of the domestic economy. Most of the company's tenants are small to medium tenants. If consumption recovery falls short of expectations, the rental rate and rent increase of the company's projects face some uncertainty.
2. New expansion projects may fall short of expectations. The company's new expansion projects may face some uncertainties, causing the progress of construction projects, investment promotion, etc. to fall short of expectations, causing a drag on the company's performance.
3. The speed of project expansion may fall short of expectations and the risk of contract expiration. The company engages in various new projects, and the speed of new development depends on close negotiations between the two parties. Some of the company's projects are facing expiration, and there is uncertainty about renewal.