Description of the event
The company achieved annual operating income of 2265.529 billion yuan, an increase of 10.24% year on year; attributable net profit of 54.264 billion yuan, up 6.50% year on year; net profit after deduction of 48.539 billion yuan, an increase of 7.31% year on year.
Incident comments
Revenue from all businesses increased, and the overall revenue growth rate remained in double digits. We achieved annual revenue of 2265.529 billion yuan, an increase of 10.24% over the previous year. By business, housing construction, infrastructure, real estate, and design revenue all increased, with growth rates of 9.4%, 12.8%, 9.5%, and 9.1%, respectively. In the fourth quarter of a single year, the company achieved revenue of 594.287 billion yuan, an increase of 14.49% over the previous year.
The gross profit margin and expense ratio declined simultaneously throughout the year, and profitability remained basically the same. The company's annual gross profit margin was 9.83%, -0.62 pct year on year. Among them, the gross margin of housing construction, infrastructure, real estate, and design changed -0.7, -0.6, -0.8, 0.4 pct year-on-year to 7.3%, 9.8%, 18.2%, and 21.3%, respectively. At the same time, the annual expense ratio was 4.71%, -0.64pct year on year. Among them, sales, management, R&D, and financial expenses rates changed 0.02, -0.14, -0.39, and -0.14 pct to 0.34%, 1.52%, 2.03%, and 0.82%, respectively.
Looking at the fourth quarter of a single quarter, net interest rates increased significantly, mainly due to a marked decrease in various expense ratios. Judging from the fact that the company continued to reduce costs and increase efficiency. The Q4 company's comprehensive gross profit margin was 12.38%, up 0.06pct year on year; the cost ratio for the fourth quarter period was 6.12%, down 1.46pct year on year. Among them, sales, management, R&D and financial expense ratios changed 0.05, -0.27, -1.11, and -0.12pct to 0.43%, 1.85%, 3.08%, and 0.76% year-on-year, respectively. The reduction in the management expense ratio is due to cost reduction and efficiency.
Affected by the downturn in real estate, the company still experienced a certain amount of depreciation in 2023. Asset impairment in 2023 was 5.706 billion yuan, an increase of 750 million yuan over the previous year. Among them, impairment of inventory, contract assets, and intangible assets all increased, rising 2.38, 3.31, and 147 million yuan, respectively, to 2.46 billion yuan, 2.60 billion yuan, and 580 million yuan, and credit impairment of 8.596 billion yuan, which was basically the same as the previous year. Looking at Q4, asset impairment was 4.22 billion yuan, an increase of 608 million yuan over the previous year, and credit impairment was 3,958 billion yuan, an increase of 1,725 billion yuan over the previous year.
Operating cash flow improved markedly, and cash flow inflows increased throughout the year. The company's net cash flow inflow from operating activities for the year was 11.030 billion yuan, with a year-on-year increase of 7.201 billion yuan; there was a year-on-year decline in the fourth quarter. The net cash flow inflow from operating activities was 27.382 billion yuan, a year-on-year decrease of 28.968 billion yuan. The revenue ratio was 101.02%, a year-on-year decrease of 8.18 pcts.
The company's orders maintained double-digit growth throughout 2023 and 2024Q1. In 2023, the company's construction industry signed new contracts of 3872.7 billion yuan, an increase of 10.6% over the previous year, of which 26894, 11685, and 14.8 billion yuan were newly signed for housing construction, infrastructure and design respectively, up 8.8%, 15.1%, and 8.8% year-on-year. By region, 36973 billion yuan and 175.5 billion yuan were signed, respectively, up 10.4% and 15.4% year-on-year. 2024Q1, the company signed a new contract of 1110.7 billion yuan, up 14.3% year on year. Among them, housing construction and infrastructure increased by 11.4% and 23.2% respectively, overseas business orders increased rapidly, and Q1 increased 38.4% year on year.
In the future, as the reform of state-owned enterprises continues to advance, the impairment of superimposed companies narrows, and performance and valuation are expected to increase simultaneously. The company's Zhonghai Real Estate is ranked second in the industry in terms of sales scale. The rest of China Construction Real Estate is also relatively large, and land storage is concentrated in Tier 1 and 2 cities. More than 90% of the new land reserves in 2023 are located in Tier 1 and 2 cities. Among them, first-tier cities, municipalities directly under the Central Government and provincial capitals such as Beishangguang account for more than 83% of the new land reserves. The land reserve structure has been further optimized, and the depreciation pressure is expected to gradually narrow in the future. In addition, recent assessments of state-owned enterprises continue to advance, and related management measures and communication efforts may continue to improve, thus boosting the company's market capitalization. It is expected to achieve results of 58.5 billion and 63.1 billion in 2024-2025. According to the 20% dividend rate, it corresponds to the current dividend rate of about 5%, and the corresponding PE is 3.81 or 3.54 times, maintaining the “buy” rating.
Risk warning
1. Macroeconomic growth falls short of expectations; 2. Accounts receivable repayments fall short of expectations