Incident: The company's revenue in 2023 was 3.738 billion yuan, up 16.49% year on year; net profit to mother was 390 million yuan, up 230.63% year on year. The company's revenue for the 2024Q1 quarter was 626 million yuan, down 8.17% year on year; net profit to mother was 29 million yuan, down 50.79% year on year.
Revenue performance grew steadily in 2023, supported by demand for completion. On the demand side, completion data is picking up, driven by Baogao buildings, etc., and the completed real estate area in 2023 was 998 million square meters, an increase of 17%. On the channel side, in 2023, the company developed close to 12,000 dealers, with dealer revenue of 981 million yuan, an increase of 11.94%. The gross margin increased by 2.45 pcts to 24.23% year-on-year under the scale model, which is not much different from the engineering business; the bulk channel continued to grow rapidly, with revenue of 2,551 billion yuan, an increase of 16.97%. Both retail and bulk increases led to a double increase in the company's 2023 revenue performance, which increased 16.49% and 230.63%, respectively.
Under pressure from completion, growth slowed, and 2024Q1 revenue and profit declined. The completed area of 2024Q1 real estate was 153 million square meters, down 20.70% year on year. The real estate sales area was 227 million square meters, down 19.40% year on year. Demand pressure and real estate sales continued to decline. As a result, the company increased the proportion of engineering agents, and gross margin of the bulk business was clearly under pressure, falling 5.90 pcts to 14.80% year on year. At the same time, work resumed late this year after the holiday season, and C-side distribution was under relative pressure. Coupled with the impact of last year's high base, 2024Q1's revenue and performance declined by 8.17% and 50.79%, respectively.
The lightweight payout ratio is high, and the dividend rate is raised to 80% for shareholder returns. In 2023, the company continued to accrue credit impairment of 107 million yuan. Currently, the company has prepared more than 80% for individual bad debts. Among them, the accrued ratio for companies such as Evergrande, Sunshine City, and Huaxia Happiness has reached 90%/70%/80% respectively. In the future, bad real estate debts will have little impact on the company, which is more conducive to the company going to battle lightly. Meanwhile, the company increased its dividend ratio to 80% this year. Based on the April 24 stock price, the dividend ratio reached 6.89%, and the company paid more attention to shareholders' rights.
Investment advice: We expect that in 2024-2026, the company will achieve net profit of 3.98/4.32/513 million yuan, an increase of 2.2%/8.5%/18.7% year-on-year. The latest closing price corresponds to PE of 11.5/10.6/8.9 times, maintaining the “increase” rating.
Risk warning: macroeconomic downside risk, real estate market falling beyond expectations, risk of rising raw material prices.