Core views
In the first quarter of 2024, the company achieved revenue of 3.72 billion yuan, an increase of 12.7% over the previous year, and achieved net profit of 190 million yuan to mother, an increase of 3.3% over the previous year. The performance growth rate was less than the revenue growth rate, mainly due to a decrease of 0.6 percentage points to 11.7% in the first quarter compared to the same period of the previous year, and a decrease of 8.32 million yuan in other income compared to the same period of the previous year. The company's management efficiency improved, and the sales management expenses rate in the first quarter decreased by 0.8 percentage points compared to the same period last year. As of the first quarter, the number of projects managed by the company reached 2,155, and the management area reached 374 million square meters, an increase of 29 million square meters over the end of the previous year. The property management business signed a new annual contract amount of 791 million yuan in the first quarter, of which the office, park, and government competitive circuits contributed significantly. The company's platform's value-added services have accelerated transformation, and the asset management business is developing well.
occurrences
The company released its 2024 quarterly report. In the first quarter, it achieved revenue of 3.72 billion yuan, an increase of 12.7% over the previous year, and realized net profit of 190 million yuan, an increase of 3.3% over the previous year.
Brief review
Performance has been improving steadily, and management efficiency has improved. In the first quarter, the company achieved revenue of 3.72 billion yuan, an increase of 12.7% over the previous year, and achieved net profit of 190 million yuan, an increase of 3.3% over the previous year, and the performance increased steadily. The performance growth rate was less than the revenue growth rate, mainly due to: 1) the consolidated gross margin for the first quarter was 11.7%, down 0.6 percentage points from the same period last year; 2) achieving other revenue of 13.3 million yuan, a decrease of 8.32 million yuan compared to the same period last year. The company's management efficiency improved. The sales management expenses rate in the first quarter was 3.4%, down 0.8 percentage points from the same period last year.
Non-permanent advantages continue to be consolidated, and the platform's value-added services are being transformed at an accelerated pace. As of the first quarter, the number of projects managed by the company reached 2,155, with a management area of 374 million square meters, an increase of 0.29 million square meters; in the first quarter, the property management business signed a new annual contract amount of 791 million yuan, a slight decrease of 1.6% over the previous year. During the period, it won bids for various major projects such as Guangzhou International Financial City and China Life Insurance Building, which contributed significantly to the competitive circuit of offices, parks, and government. The company's value-added platform services accelerated transformation, voluntarily abandoned some low-margin businesses, and increased profitability. Businesses such as live streaming, home delivery services, and public area resources grew rapidly; surplus facilities won bids for projects such as Honor National Representative Office (Southern District), Hikvision Binjiang Phase V, and Xinkailai Pinghu Intelligent Manufacturing Park, and Construction Technology successfully won the bid for large-scale park projects such as Kweizhou Moutai Liquor Store, showing strong competitiveness.
The asset management business is developing well. In terms of commercial operations, as of the first quarter, the company was managing 70 commercial projects, including 3 self-owned projects, 58 investment promotion Shekou projects, 9 third-party brand export projects, and a commercial project management area of 3.97 million square meters; in the first quarter, concentrated commercial sales increased 27.6% year on year, and the same store increased 7.2% year on year. In terms of property ownership, as of the first quarter, the total leasable area of properties held by the company was 469,000 square meters, with an overall occupancy rate of 95%, which was basically the same as at the end of the previous year.
Keep the purchase rating and target price of $15.24 unchanged. We predict that the company's EPS for 2024-2026 will be 0.85/1.03/1.23 yuan respectively, keeping the purchase rating and target price unchanged at 15.24 yuan.
Risk warning: 1) The overall risk of the industry and the ability to raise property fees fall short of expectations. This includes the risk that the competitive landscape of the industry deteriorates beyond expectations or that policy regulation exceeds expectations. The unit price of the company's property fee is limited by the guide price and the penetration rate of the industry committee. Price adjustment is difficult, and the degree of marketization may fall short of expectations. 2) The expansion of the project fell short of expectations and exceeded expectations on the cost side. (a) Endogenous growth: The parent company was affected by the overall impact of the real estate industry, slowing down, and project delivery fell short of expectations.
(b) Outreach growth: Outreach progress falls short of expectations. (c) Stock business: The pressure to renew contracts has increased, and the growth rate of the area under management has slowed down. Cost side: The company's main costs, such as labor costs, rose more than expected, or cost reduction and efficiency measures fell short of expectations, putting pressure on the company's profit margin. 3) The progress of the heavy asset divestment fell short of expectations. At the end of 2022, the company announced plans to divest seven subsidiaries. If the actual divestment progress falls short of expectations, it may have an impact on the company's performance.
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