Operating performance has been rising steadily, and shareholder returns have continued to grow. In 2023, the company achieved a turnover of 251.14 billion yuan, +21.3% year-on-year; net profit to mother was 31.37 billion yuan, +11.7% year-on-year. As of December 31, 2023, the company's consolidated gross profit margin was 25.2%, -1.0 percentage point year on year; together with the paid interim dividend and recommended final dividend, the annual dividend per share will be RMB 1.441, or +2.9% year over year.
The development and sales business is in the first tier of the industry. In 2023, the company achieved a contract amount of 307.03 billion yuan, +1.9% year-on-year, ranking fourth in the industry. The company adheres to strategy leading investment and revenue as the first principle. With cash flow safety as the first principle, it acquired 68 new projects during the year, with first-tier and second-tier cities accounting for 92.8% of investment. It settled in a residential project in the northern metropolitan area of Hong Kong, becoming the first example of cooperation between central enterprises and Hong Kong investors in the northern metropolitan area. As of December 31, 2023, the company's total land reserve area was about 62.497 million square meters, of which 52.453 million square meters were stored in development properties, accounting for 73% in first-tier and second-tier cities.
The leading position in the operational real estate business industry was further consolidated. In 2023, the company's shopping center turnover reached 17.85 billion yuan, +29.7% year-on-year. The 76 shopping malls in operation achieved retail sales of 163.87 billion yuan, +44.2% over the same period. The retail sales of 61 shopping malls ranked in the top three in the region; 10 shopping malls opened with high quality as scheduled, with an average occupancy rate of 96.2%. During the year, the company acquired 8 new high-energy shopping malls, located in key cities such as Beijing, Shanghai, Guangzhou, Nanjing, Wuhan, and Sanya, achieving major breakthroughs in the strategic layout of core cities.
The scale of asset management continues to increase, and the commercial REITs platform has been built. By the end of 2023, the company's asset management scale reached 427.46 billion yuan, +19.2% year-on-year, of which shopping centers accounted for 63.3%.
Huaxia China Resources Commercial REIT (180601.SZ) was successfully listed on the Shenzhen Stock Exchange on March 14, 2024, raised nearly RMB 7 billion in capital, completed the construction of a commercial REITs platform, realized a closed loop system of investment, finance, construction and management, and laid a solid foundation for the gradual transformation into a major asset management business.
Cash flow is sufficient and finances remain resilient. As of December 31, 2023, the company's cash on hand was 114.3 billion yuan, +17.3%; total interest-bearing debt ratio and net interest-bearing debt ratio fell to industry lows of 38.4% and 32.6% respectively. The three red lines remained green, and weighted financing costs were 3.56%, a record low in nearly ten years. We believe that the company has sufficient operating cash flow, a stable balance sheet, actively controlled the increase in the scale of financing during the year, measured income and output, and achieved healthy endogenous development.
Investment advice: Maintain an “better than the market” rating. Considering that the company is a leading real estate property in the central region, and profit growth is steady and orderly, we believe that the corporate commercial and residential integration model is in line with the development direction of the new real estate industry model. The 2024 EPS is RMB 4.75, 10-11 times the PE valuation. The corresponding market value range is HK$3700-407 billion, and the corresponding reasonable value range is HK$51.89-57.08 per share. Risk warning: 1) The growth rate of the total number of new homes in the real estate industry is at risk of shrinking; 2) Market recovery falls short of expectations.