Incidents:
On March 26, the company announced its 2023 results announcement. It achieved annual revenue of 14.767 billion yuan, an increase of 22.9%; gross margin of 31.8%, an increase of 1.7 pct; realized net profit to mother of 2,929 billion yuan, an increase of 32.8% over the previous year; and the board of directors resolved to declare a final dividend of 0.481 yuan per share.
Property management business is growing rapidly, and community value-added business is growing steadily
In 2023, the company's residential property management services achieved revenue of 9.601 billion yuan, up 23.1% year on year, of which property management service revenue was 7.245 billion yuan, up 30.0% year on year, and community value-added service revenue was 1,526 billion yuan, up 21.5% year on year. The property management business managed a construction area of 355 million square meters, up 24.6% year on year; contracted construction area was 406 million square meters, up 15.9% year on year; the number of residential and other non-commercial projects under management was 1,731, an increase of 262 over 2022.
Shopping malls broke 100, and office business bucked the trend
In 2023, the company's commercial operations and property management services achieved revenue of 5.166 billion yuan, an increase of 22.6% over the previous year. Thirteen new shopping centers have been opened, and 14 new commercial asset-light outbound projects have been signed. A total of 101 shopping malls were opened, with retail sales of 181.2 billion yuan, up 43.3% year on year. Of this, rent revenue was 22 billion yuan, up 38.8% year on year, and the operating margin on the business side reached 64.7%, up 5 pcts year on year. The office business bucked the trend and achieved revenue of 19.28 billion yuan, an increase of 11.3% over the previous year. The office occupancy rate reached 83.9%, an increase of 3.2 pct over the previous year, 195 projects under management, and an area of 14.82 million square meters.
The number of members has increased, and digital construction is advancing at an accelerated pace
The company continues to promote the construction of the Vientiane Star membership system. By the end of 2023, the total number of members reached 46.25 million, an increase of 36.0% over the previous year, a cumulative total of 890 million yuan in points, an increase of 56% over the previous year, and a cumulative total of 660 million yuan in exchange points, an increase of 61% over the previous year. In terms of digital platforms, the number of monthly active users of “One Little Vientiane” increased by 52%, attracted 260 million yuan in in-store spending, and launched the self-developed e-commerce system “Dynasty Ancient Mall”.
Profit Forecasts, Valuations, and Ratings
Considering the pressure on the real estate market, mergers and acquisitions lower average property fees, but gross margin improvements and cost ratios are declining, we expect the company's 2024-2026 revenue to be 178.05, 207.92 billion yuan, and 24.129 billion yuan respectively, with year-on-year growth rates of 20.6%, 16.8%, and 16.1%, respectively, and net profit to mother of 35.68, 41.91, and 4.863 billion yuan, respectively. The year-on-year growth rates are 21.8%, 17.5%, and 16.0%, EPS is 1.56, 1.84, and 2.13 yuan/share for 3 years The CAGR is 18.4%. In view of the scarcity of the company's commercial management business and strong competitiveness in the property management business, as an industry leader, the growth rate is higher than the industry average. Referring to the valuation of comparable companies, we gave the company 20 times PE in 2024, with a target price of HK$34.42 (HKD = 0.9084 yuan), maintaining a “buy” rating.
Risk warning: The announced results have not been audited, there is a risk of mergers and acquisitions integration, and market recovery falls short of expectations