Event: On March 28, 2024, the company released its 2023 annual report. For the full year of 2023, the company achieved operating income of 3.95 billion yuan, +14.9% year-on-year; realized net profit of 1.26 billion yuan, +12.8% year-on-year.
The property leasing and management business maintained steady growth: the revenue from the property leasing and management business mainly came from office buildings, malls and apartments, where the average rent for office buildings increased slightly by 1.8% year on year, and the occupancy rate remained at a high level of over 95%; the average rental rate of shopping malls was +10.4%, mainly benefiting from the increase in commission rental income brought about by the increase in new rental and renewal rents and the increase in the turnover of mall tenants; the apartment business gradually declined slightly with the unit price of rent, but it gradually resumed normal operation after completion of renovation in 2020, and the average occupancy rate rapidly increased to 85.5.5% (85.5%) 39.4% in 2021 and 73.3% in 2022).
The hotel business resumed normal operation, and revenue increased dramatically: after the impact of unexpected external factors was eliminated, the hotel business resumed normal operation, and revenue increased sharply by 107.4% year-on-year, contributing to performance growth points.
The cash flow situation is good, and the dividend rate has increased again: the company's operating cash flow continues to maintain a net inflow, and there are no large-scale investment transformation plans in the short term, which can effectively support dividends. In 2023, the company plans to distribute a cash dividend of 0.8 yuan/share and a special cash dividend of 0.5 yuan/share. The total dividend accounts for 104% of the net profit to mother.
Investment advice: We believe that the assets held by the company are of high value, that the business style is steady, and that it is not expanding blindly. Hotel and apartment performance grew rapidly after external adverse factors were eliminated. At the same time, dividends are stable, and the dividend ratio is still increasing, which is highly attractive. We expect the company to achieve operating income of 42.31/44.55/ 4.593 billion yuan in 2024-2026, and net profit to mother of 1,395/1,494 billion yuan. The corresponding PE was 17.47/16.64/16.31 times, respectively, maintaining the “gain” rating.
Risk warning: Rental growth falls short of expectations, insufficient demand for shopping malls due to economic downturn, declining occupancy rates, increased competition due to increased supply of office buildings in the CBD region, and a decrease in dividend ratios, etc.