龙湖集团(00960.HK):开发业务承压 偿债铺排清晰

Longhu Group (00960.HK): Development business is under pressure and debt repayment arrangements are clear

東方證券 ·  Apr 17

The company announced its 23-year results. Operating revenue decreased 27.9% year over year to 1807.4 billion yuan, net profit to mother of 12.85 billion yuan, and net profit to mother decreased by 49.6% year on year to 11.35 billion yuan after excluding the impact of changes in fair value.

The gross margin of the development business bottomed out, and operating and service revenue continued to increase steadily. Affected by the overall decline in the industry, the company's development business was under pressure. Revenue decreased 31% year over year to 155.9 billion yuan, and gross margin fell further by 6.9 pct to 11.0%, which is expected to bottom out and stabilize. The operating business continued to grow. Rental income from owned properties increased 9% year on year, and gross margin increased to 76%; gross margin of property service revenue increased by 2 pcts to 31.0%, reaching 360 million square meters of managed area.

Sales continue to be under pressure, and land acquisition is focused on core cities. In '23, the company achieved full-caliber sales of 173.5 billion yuan and a full-caliber sales area of 10.8 million square meters, a year-on-year decrease of 13.9%/15.5%, respectively. The decline was narrower than last year. In '23, 3.68 million square meters of land storage were added, and equity land acquisition sales ratio was 23%. Although the value added is insufficient to support the company's sales growth, it can maintain the sustainability of the company's sales to a certain extent. Land acquisition in '23 focused on core cities in western China and Yangtze River Delta regions, such as Xi'an and Chengdu, and the share of first-tier and second-tier cities in total land storage increased to 72% of the total construction area. The average price of the company's new soil storage floor is 9730 yuan/square meter, while the average cost of total soil storage is only 4,705 yuan/square meter, and the quality of investment has improved markedly.

Debt pressure has been reduced in a steady and orderly manner, and debt repayment arrangements are clear. In 2023, the company achieved positive operating cash flow as a whole. The company's debt pressure dropped steadily and in an orderly manner. As of the end of '23, interest-bearing debt was 192.6 billion yuan, down 7.4% year on year, of which the balance of debt maturing within 24 years was 14.7 billion yuan, accounting for about 8% (as of March 22). The balance of domestic corporate bonds in '24 was only 6 billion yuan, and there were no overseas public bonds maturing before the end of '26. The company's core debt index is good. At the end of '23, the company was in the three red lines. The balance ratio, net debt ratio after excluding advance accounts, and the short cash debt ratio after excluding pre-sale supervisory funds and restricted funds were 60.4%, 55.9%, and 1.36 times, respectively. The debt structure continued to be optimized, the average loan period was extended to 7.85 years, and the share of foreign debt fell to 17.7%. As of the end of '23, the company's operating property loan balance was 47.4 billion yuan. Since the beginning of '24, the operating property loan replacement amount for existing projects has increased by more than 11 billion dollars, and the operating assets held by the company still have room for financing.

Maintain the buy rating and adjust the target price to HK$10.37. According to data disclosed by the company and recent operating conditions, the forecast for sales growth rate, gross margin and expense ratio was adjusted. The adjusted net profit forecast value for 23-25 was 128.5/113.6/9.89 billion yuan (the original forecast for 23-25 was 210.4/225.9/25.08 billion yuan). Referring to comparable companies, the 2024 PE valuation was 5.6x, corresponding to a target price of HK$10.37. (1 HKD = 0.907 RMB)

Risk warning: The market declined more than expected. Policy easing fell short of expectations. The industry's credit risk is spreading further.

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