The 23-year performance was -32%, in line with expectations. The 24Q1 performance was +18% year-on-year, exceeding expectations, and abundant resources. According to the announcement, the company's revenue in '23 was 70.4 billion yuan, +69.7% year on year; net profit to mother was 2.53 billion yuan, -32.4% year on year; deducted non-performance of 2.40 billion yuan, or -35.5% year on year; basic earnings per share were 0.81 yuan, or -32.5% year on year. Gross margin and net profit margin were 16.8% and 3.6%, respectively. The year-on-year decline was -0.7 pct and -5.4 pct, respectively. The decline in net return to mother was mainly due to investment income of 1.05 billion yuan during the period, or -52% year over year. The three-fee rate was 3.1%, -2.8pct year-on-year, with sales, management and finance rates of -0.7pct, -0.4pct, and -1.7pct, respectively. In '23, the company accrued asset impairment losses of 3.78 billion yuan, +438% over the same period last year. Advance accounts collected at the end of 23 billion yuan were 143.1 billion yuan, +9.7% year-on-year, covering 2.1 times the real estate settlement revenue in '23.
The company plans to pay a dividend of 0.09 yuan per share, corresponding to a dividend ratio of 11%, a year-on-year dividend of -10pct, corresponding to a dividend rate of 1.4% (4/26 closing price). 24Q1 revenue was 13.7 billion yuan, +35.8% year on year; net profit to mother was 660 million yuan, +17.8% year over year; gross margin and net profit margin were 12.1% and 4.8%, respectively, -8.6pct and -0.7pct year-on-year, respectively.
In '23, sales of 153.5 billion were the same, and the ranking rose to 11th. In 24Q1, sales of 26.3 billion yuan rose to 8th place. According to the announcement, the company's sales volume in '23 was 153.5 billion yuan, far better than the average value of the top 50 real estate companies of -21%; Kerry ranked 11th, up 2 places year on year, and won the Hangzhou Market Sales Championship for 6 consecutive years. The annual equity sales cash returned 73.2 billion yuan, a record high; sales area of 3.34 million square meters, +8.4% year over year; average sales price was 46,000 yuan/square meter, -8.0% year on year. The company plans to generate sales of more than 100 billion yuan in 24 years, accounting for 1% of the total scale of the industry, and is ranked within 15 countries. In 24Q1, sales volume was 26.3 billion yuan, higher than the average growth rate of -50% of the top 50 real estate companies, and the ranking was further raised to 8th; sales area was 670,000 square meters, -33% year-on-year; average sales price was 40,000 yuan/square meter, -4% year-on-year. Hangzhou's continuous easing of purchase restrictions in October 2023 and March 2024 to activate the market will also benefit the company's sales performance this year.
Land acquisition was 57.7 billion yuan in '23, and Hangzhou accounted for 87%. The corresponding land acquisition/sales ratio was 38%, and land acquisition remained active in 24Q1. According to the announcement, the amount of land acquired by the company in 23 years was 57.7 billion yuan, or the equity ratio was 44%, of which Hangzhou accounted for 87%; the land acquisition area was 3.33 million square meters, -29.5% year-on-year; and the average land acquisition price was 17,300 yuan/square meter, +12.4% year-on-year. The ratio of land acquisition/sales amount in '23 was 38%, the ratio of land acquisition/sales area was 100%, and the average land acquisition/sales price ratio was 38%. By the end of '23, the company had a total sales value of 260 billion yuan, of which Hangzhou, Zhejiang (excluding Hangzhou), and others accounted for 56%, 24%, and 20% respectively.
The company plans to keep the equity land acquisition amount within 40% of equity sales repayment in 23 years, continuing to focus on Hangzhou, Zhejiang, and Shanghai from outside the province. The 24Q1 company's land acquisition amount was 11.4 billion yuan, +33% over the same period; the 24Q1 land acquisition/sales amount ratio was 43%, the land acquisition/sales area ratio was 60%, and the average land acquisition/sales price ratio was 73%.
Interest-bearing debt continues to decline, but cash on hand has increased, financing costs have declined at a low level, and financial security has been further improved. By the end of '23, the company continued to be in the three red lines, with a pre-debt ratio of 56.4%, -4.3 pct; net debt ratio of 15.1%, 40.3 pct year over year; short cash ratio 2.4 times, +0.75 times year on year; monetary cash of 32.7 billion yuan, +34.4% year on year; and cash flow from operating activities of 32.65 billion yuan, up 526.2% year on year. Interest-bearing debt at the end of 23 billion yuan, or -22.5% year-on-year, corresponding decrease of 12 billion yuan; equity interest-bearing debt was 36 billion yuan, or -23.4% year-on-year, corresponding decrease of 11 billion yuan; bank loans and bonds accounted for 80% and 20% of interest-bearing liabilities at the end of 23, respectively; average financing costs were as low as 4.20%, compared to -40BP in '22. Since the beginning of the year, the company has successfully issued a number of bonds: short loans of 700 million yuan/ 3.64% /1 year on 24/2/2, issuance of 700 million yuan/ 3.64% /2 years on 24/3/18, and issuance of short loans of 700 million yuan/ 3.55% per year on 24/4/8. The company plans to stabilize the scale of equity and interest-bearing debt for 24 years, keep the one-year direct financing scale within 4 billion yuan, ensure a reduction in financing costs to 4%, and aim to reduce it to less than 4%.
Investment analysis: Q1 performance exceeded expectations, rich resources, safer finances, and maintained a “buy” rating. Binjiang Group has been deeply involved in Hangzhou for 30 years. Since 2015, the company's sales shift has accelerated, and the company's sales ranking has risen to 11th place in the industry in 2023. In recent years, the company has actively acquired and expanded its land acquisition, focusing on Greater Hangzhou, which will give the company greater sales flexibility and gross margin elasticity in the future. Considering that industry sales and profit margins are still under pressure, we lowered the company's 24-25 profit forecast to 29.1/3.34 billion yuan (originally 47.5/5.72 billion yuan), respectively, and introduced the 26-year profit forecast to 3.69 billion yuan, corresponding to a 24-year PE of 6.9X, and we are optimistic that the company will also benefit from pattern optimization and quality improvements as well as improvements in the quantity and quality of land acquisition in the past two years to give flexibility to later performance and maintain a “buy” rating.
Risk warning: Real estate regulation policies have been tightened beyond expectations, removal rates have fallen short of expectations, financing has been tightened, and costs have risen.