24Q1 revenue achieved double-digit year-on-year growth, maintaining a “buy” rating
The company released its quarterly report on April 25. In 24Q1, it achieved revenue of 3.72 billion yuan, +13% year on year; net profit to mother of 190 million yuan, +3% year over year; net profit after deducting non-return to mother of 180 million yuan, +10% year over year. We maintain the 2024-2026 EPS profit forecast of 0.84, 0.97, and 1.13 yuan, respectively. Comparable companies' average 2024 PE was 11 times (Wind agreed). Considering the company's competitive advantage in the non-residential sector and the A-share liquidity premium, we still gave the company 18 times 2024PE with a target price of 15.12 yuan, maintaining a “buy” rating.
Lean efficiency improvement+reduction in interest-bearing liabilities led to a year-on-year improvement in the expense ratio of 0.7pct24q1. The company's revenue growth rate fell short of revenue year-on-year, and the net profit growth rate fell short of revenue. The main reasons were: 1. Gross margin continued to be under pressure, -0.6 pct to 11.7% year over year; 2. VAT input tax plus deductions and government subsidy amounts decreased year on year, leading to other income -8.32 million yuan year over year; 3. Bad debt provision for accounts receivable was +4.18 million yuan year over year. However, the company's expense ratio improved 0.7 pct year over year: on the one hand, thanks to lean management efficiency, the sales and management expense ratio (excluding R&D expenses) was -0.8 pct to 3.4% year over year; on the other hand, the 1.5 billion yuan ticket expired at the end of January, and the company did not use the compression of new and old interest-bearing liabilities to drive the financial expenses ratio -0.4 pct to 0.1% year over year.
Property management business: Continuing to consolidate its leading edge in non-residential property management, value-added services steadily promoted the 24Q1 company signing a new annual contract amount of -2% to 790 million yuan. Office, park, and government advantage tracks contributed significantly, and continued to make breakthroughs in the expansion of financial, hospital, and rail transit projects. As of 24Q1, the company had 2,155 projects under management, with a management area of 374 million square meters, +54 units/0.3 billion square meters at the end of 23. In addition, the company continues to promote the platform's value-added services to improve quality and efficiency. Enterprise services focus on the office scene, continue to develop its own live streaming platform, add storage and arrangement service categories to home services, strengthen fine operation of public area resources, and continue to expand the number of charging pile connections; in terms of professional value-added services, the facility management and construction technology business won bids for key projects such as Rongyao, Hikvision, and Kweichow Moutai Liquor Store respectively.
Asset management business: Concentrated commercial retail sales, customer traffic, and number of members achieved impressive results. As of 24Q1, the company was managing 70 commercial projects with a management area of 3.97 million square meters, including 3 self-owned projects, 58 investment promotion Shekou projects, and 9 third-party brand export projects. The company disclosed centralized commercial operation data for the first time, and achieved impressive results: 24Q1 retail sales +28% YoY, same store +7%; customer traffic +44% YoY, same store +21%; total number of members +32% YoY. Furthermore, as of 24Q1, the total leasable area of the company's own hotels, shopping centers, commercial and office buildings was 470,000 square meters, with a occupancy rate of 95%, a slight decrease of 1 pct from the end of '23.
Risk warning: The support of related housing enterprises is weakening, profitability is declining, and the separation of key assets falls short of expectations.