Event: The company announced 2023 and 2024Q1 results. Throughout 2023, the company achieved revenue of 12.09 billion yuan (yoy +3.6%), achieving net profit of 850 million yuan (yoy -173.9%); with 2024Q1, the company achieved revenue of 2.75 billion yuan (yoy -12.6%), and achieved net profit of 25 million yuan.
Revenue increased year-on-year for the year, and losses due to non-operating and one-time factors increased. In 2023, the company achieved revenue of 12.09 billion yuan (yoy +3.6%), achieved gross profit margin of 9.47% (yoy+0.8pct), and achieved net profit of -850 million yuan, an increase in loss margin over the same period in '22. The main reason was due to some non-operating and one-time factors, which affected the company's total profit of about 700 million yuan, mainly including: ① The company implemented a one-time asset and credit impairment of about 400 million yuan; ② The company implemented an employee stock ownership plan in 2021, including shares confirmed in 2023 The payment fee is about 0.3 billion yuan; ③ 2023Q2, the company returns part of the government subsidy funds; ④ due to prudential principles and the company's relevant accounting policy regulations, the company expects to lose about 50 million yuan due to changes in the fair value of investment real estate owned by the company; ⑤ the company invests about 150 million yuan in various marketing and promotion expenses due to brand upgrades.
2024Q1, the company achieved revenue of 2.75 billion yuan (yoy -12.6%) and achieved net profit of 25 million yuan. Among them, the main reason for the year-on-year decline in revenue was the high base for the same period last year.
23. GTV grew by double digits year-on-year throughout the year, and the market share of core cities continued to rise. In 2023, the company's brokerage business achieved GTV of 222.2 billion yuan (yoy +10.2%). The main reason for GTV's double-digit increase was:
① The stock housing industry's transaction volume is picking up; ② The company's market share in some core cities continued to increase, with a year-on-year increase of 0.7 pct in Shanghai, and the share share of Beijing and Hangzhou continued to maintain leading positions. Thanks to the high growth of the company's GTV, the company's annual brokerage business achieved revenue of 4.09 billion yuan (yoy +15.9%) and a gross profit margin of 20.2% (yoy+3.4pct)
2024Q1, the company's market share in core cities continued to rise. Among them, Shanghai's market share was +0.5pct year over year, Hangzhou's market share was +0.5pct year over year, and the market share in Beijing continued to maintain the leading position.
The brokerage business focuses on core cities and continuously adjusts the business structure. The company's business continues to focus on first-tier and new-tier core cities. The exhibition area covers 15 domestic cities including Beijing, Shanghai, Hangzhou, Nanjing and Suzhou. In 2023, the company further streamlined the franchise business with low operating efficiency in non-core cities. By the end of 2023, the total number of stores operated by the company in China was 2,853, including 2,323 direct-run stores and 530 franchise stores.
As of 2024Q1, the total number of stores operated by the company in China was further optimized to 2,794, including 2,284 direct-run stores and 510 franchised stores. The total number of agents was about 30,000, of which the total number of direct-run city agents was about 28,000, an increase of 200 compared to the beginning of the year.
The quality and efficiency of the asset management business has been improved, and the scale of management has increased steadily. By the end of '23, the number of properties managed by the company reached 271,000 units (yoy +6.7%). In 2023, the average number of days left for the company's asset management business was 8.3 days, a significant decrease of 11.7% compared to 2022, and the asset management business rental rate reached 96.4% (yoy+2.3 pct). Thanks to the increase in the scale of the company's asset management and the improvement of operating capacity, in 2023, the company's asset management business achieved GTV of 16.9 billion yuan (yoy +2.6%), achieved operating income of 5.76 billion yuan (yoy +1.9%), and achieved a gross profit margin of -5.4% (yoy+0.6pct). The gross margin of this business was negative in 2023. The main reason is that, based on the new leasing standards, the revenue from some properties was confirmed in the “Asset Disposal Proceeds” category. If this portion of revenue is adjusted back, the gross margin of the company's asset management business in 2023 is 13.3% (yoy+2.0pct)
2024Q1, the company's leasing business continued to grow steadily. In 24Q1, the company's leasing business achieved 43,700 general rental orders (yoy +1.1%). By the end of 24Q1, the company's Xiangyu business managed 279,000 units, an increase of 80,000 units compared to the beginning of the year.
Profit forecasting and valuation. The company's brokerage business focuses on core cities, and its market share continues to rise. At the same time, the asset management business improves quality and efficiency, and continues to be a stabilizer of the company's performance. We expect the company's revenue for 2024-2026 to be RMB 1333, RMB 149.5 and RMB 16.89 billion, respectively, and net profit to mother of RMB 0.7, 130, and 160 million yuan respectively. Corresponding PE was 49.9x, 29.4x, and 23.6x respectively, and the first coverage gave a “recommended” rating.
Risk warning: The popularity of housing stock is unsustainable, the recovery of new housing transactions is lower than expected, and the scale expansion is not smooth.