Park revenue has declined, and photovoltaics are about to enter the harvest period
The company released its annual report on April 19. In 2023, it achieved revenue of 3.66 billion yuan (YOY -22.9%), net profit to mother of 1.36 billion yuan (YOY -15.3%), EPS 0.91 yuan, and plans to pay 2.73 yuan for every 10 shares.
The company has an operational advantage in the park development sector. The two-wing business has entered a period of development, and the photovoltaic sector is about to enter a harvest period, and the future can be expected. Due to low land market conditions and operating time exceeding expectations, we expect the company's EPS in 2024-2026 to be 0.91/0.92/1.00 yuan (previous value 1.17/1.31/-yuan); comparable company's average PE (wind consensus forecast) in 2024 is 11.8 times, giving the company 11.8 times PE in 2024 and a target price of 10.74 yuan (previous value 13.32 yuan) to maintain the “buy” rating.
Affected by the land market boom and environmental emission reduction business, the company's revenue and net profit to mother declined year-on-year during the period of decline in revenue and profit. The main reason was that the land market restoration process in non-core cities was slow, the company's park development business revenue fell 26.3%, and the gross margin level fell 6.3 pct to 58.4% year on year. At the same time, revenue from the emission reduction business declined, and green power generation was still growing, causing the revenue and gross margin of the green development business to also drop by 14.0% and 5.1 pct, respectively. However, the increase in value-added investment of industrial funds contributed to a year-on-year increase in fair value change profit and loss by 190 million yuan. Due to a decrease in the current settlement volume of the Jiashan project, where minority shareholders' equity is relatively high, the profit and loss of minority shareholders fell by 410 million yuan year on year during the period, and net profit to mother fell 15% year on year under the combined impact.
The new energy business has accelerated its layout, and the installed photovoltaic capacity has increased dramatically
The company continues to make efforts in the field of distributed photovoltaics and other new energy sources. In '22, the company invested in the establishment of New Green Energy, a photovoltaic investment platform. During this period, the company further promoted its upstream and downstream resource advantages in laying out photovoltaics, and established joint ventures with companies such as Singapore Yige New Energy, Shuangjie Electric, and Hong Kong Energy Investment to jointly expand photovoltaic projects. By the end of the period, Sino-Singapore Green Energy and participating companies had completed a total of 474 MW connected to the grid, an increase of 356% over the previous year, and 211 MW of projects under construction. The photovoltaic business is about to enter a harvest period, preparing for future development.
Industrial investment continued to gain strength. The District Zhongyuan Real Estate Management Platform added 10 new pledged investment funds, with a pledge amount of 900 million yuan, and set up a new direct investment fund with a scale of 300 million yuan during the asset-light expansion period, focusing on “specialization and innovation” and other fields of technology, and added 11 new direct investment projects. By the end of the period, the company had pledged a total of 47 industrial investments, amounting to about 4.2 billion dollars. The number of invested projects listed, reported and proposed to be reported reached 92. A total of 36 science and technology projects have been directly invested, amounting to 550 million yuan, driving a total investment of 5.86 billion yuan and promoting park development collaboration. The company successfully issued 1 billion yuan of new startup bonds during the period, with a coupon interest rate of 2.9%, to further expand the industrial investment business. The District Zhongyuan Project has also begun the path of capitalization. Xinyuanrui, a real estate private equity fund management platform, and Zhixin Tianhong, an investment management platform, were established to lay the foundation for future asset-light expansion.
Risk warning: The land market is declining; the Yangtze River Delta economy is declining; the expansion of the new energy business falls short of expectations.