FY23: The ability to create value remains the same, and the market position remains leading; maintaining the “buying” company's FY23 performance: revenue of 2025 billion yuan, +12% year over year; gross profit margin of 20.3%, -0.98 pct year on year; net profit to mother of 25.6 billion yuan, +10% year over year, higher than our forecast value for FY23 of 24.9 billion. The company's profit margin continues to lead the industry, and its ability to create value remains the same. Considering the company's carry-over situation, we adjusted the company's 24-26E EPS to 2.45/2.72/2.83 yuan (24-25E previous value: 2.59/3.01 yuan). The average 2024E PE value of comparable companies was 6.8 times (Wind agreed). Considering that the company's financial situation is good, the development business maintains a leading position, and the superimposed non-development business maintains a growth trajectory, we believe that the company's reasonable 2024E PE is 7.4 times, and the target price was adjusted to HK$19.77 (previous value: HK$26.88), maintaining a “buy” rating.
Development business: Market share continued to rise, bucking the trend and increasing investment intensity. The company continued to outperform the industry in 23 years with contract sales of 309.8 billion yuan, and its sales performance continued to outperform the industry. The full caliber/equity sales ranking was 3/2 in the industry, and the overall market share increased by 0.29pct to 2.66%. The company's market share in 31 cities ranked in the top three local markets (22:30), and its market share continued to increase. The company bucked the trend and increased investment intensity in 23 years. The land acquisition intensity was +5pct to 46% year-on-year, adding the largest investment scale in the industry. During the year, additional land storage value was 240.4 billion yuan, +12% over the same period last year, and 60% of the new soil storage value was located in first-tier cities, +12.2 pct compared to the previous year. The company plans to supply 60.7 billion dollars in 2024, of which first-tier and second-tier goods account for 97% of the total value. With sufficient and high-quality supply support, we expect the company's sales to rise steadily in 24 years.
Non-developed business: Deepening lean asset management. The operating business has grown rapidly for 23 years. The company's commercial operation sector has ushered in rapid development, with revenue +21% over the same period last year to 6.4 billion. By business type, office buildings: 930,000 square meters of newly contracted area during the year, +11% compared with the same period. Among them, the rental rate for projects over three years reached 90.2%, and the gross profit margin was 70.5%. Shopping malls: Revenue was +40% year over year, and the 5-year compound growth rate reached 27%. Among them, the occupancy rate for projects over 3 years was 98.4%, gross profit margin was 64.4%, and same-store sales and customer flow were +22%/+24%, respectively. Hotels: Strong business recovery, occupancy rate +23pct, revenue doubling. By the end of 23H2, Tier 1 and 2 cities accounted for 97% of the company's commercial operation reserve project. We expect the commercial operation business to maintain its growth momentum and achieve the target of 25% growth in 24 years.
Financially sound, continuing to improve shareholder returns
As of the end of 23H2, the company maintained three red lines and green levels. The amount of interest-bearing debt was 257.7 billion yuan, -4.6% year-on-year, and the average financing cost was 3.55%, which was basically the same as the previous year, maintaining a low position in the industry. The company achieved a net operating cash flow inflow of 35.3 billion dollars and cash in hand, accounting for 11.4% of total assets. We believe that abundant cash flow not only provides sufficient ammunition for the company's subsequent investments, but also greatly improves the stability of the company's future dividends. While creating value, the company continued to increase shareholder returns. For the full year of '23, the dividend was 80 HKD, corresponding to a dividend ratio of about 30%.
Risk warning: carry-over revenue and profit margins fall short of market expectations; sales growth falls short of market expectations.