Incident: Nandu Property announces 2023 results report. Throughout 2023, the company achieved operating income of 1,851 billion yuan (yoy +0.23%); achieved net profit of 186 million yuan (yoy +27.69%); the company plans to distribute a cash dividend of 0.35 yuan (tax included) per share to all shareholders, with an annual cash dividend ratio of 35%.
Revenue progressed steadily, and net profit to mother & net operating cash flow increased. In terms of revenue: In 2023, the company achieved operating income of 1,851 billion yuan (yoy +0.23%), of which revenue from property management services was 1,624 million yuan (yoy +2.16%), accounting for 87.5% of total revenue, which was the main contributor to revenue growth; in terms of profit, it achieved net profit of 186 million yuan (yoy +27.69%) for the whole of 2023, with significant growth. The main reason is that Anbang Guard, which the company invested in, successfully went public during the reporting period and confirmed a profit and loss of 127 million yuan from changes in fair value. In terms of cash flow: Net cash flow of 185 million yuan (yoy +18.75%) from operating activities was recorded for the full year of 2023, thanks to the increase in the company's repayments.
Sales & management rates declined year-on-year, and management efficiency continued to improve. In 2023, the company reduced costs and increased efficiency, and continued to optimize expenses. Annual sales expenses and management expenses were reduced by 145,800 yuan and 3.1281 million yuan, respectively, with year-on-year changes of -0.46% and -2.48%. Sales and management rates for 2023 recorded 1.71% and 6.65% respectively. Compared with -0.2pct in the same period last year, the company's sales rate and management rate have been continuously optimized since 2017, and overall operating efficiency and transportation capacity have continued to improve.
Continue to cultivate the Yangtze River Delta region and deepen the layout of non-residential business formats. By the end of 2023, the company had signed 722 property contracts, with a total contract area of 886.8854 million square meters (yoy +4.45%), achieving steady scale expansion. Among them, the Yangtze River Delta region accounted for 88.38% (yoy+1.38pct), which is a key area for the company's business. From the perspective of the project composition structure, by the end of 2023, the proportion of the company's non-residential projects had gradually increased to 36.4% (yoy+4.4pct), of which commercial projects and urban service projects accounted for 25.8% and 10.6% respectively. The main reason was that the company broadened traditional property service channels and deepened the layout of the non-residential business format. Of the new contract area in 2023, non-residential projects accounted for more than half of the newly developed area.
Profit forecasting and valuation: The company's revenue is progressing steadily, net profit and operating cash flow both recorded high year-on-year growth, and operating efficiency and operation capacity continue to improve. The deep expansion of the region and the deepening of the non-residential business layout are worth paying attention to. We expect the company's 24-26 revenue of 19.2, 19.9, and 2.04 billion yuan, and net profit of 190, 1.96, and 20 million yuan, corresponding PE of 8.0, 7.8, and 7.6 times, respectively. For the first time, coverage was given a “recommended” rating.
Risk warning: industry competition intensifies; rate control is not effective; business development is slowing down.