Incident: The company actively repurchased shares in the secondary market, and net profit to mother decreased year-on-year losses in 2023.
In 2023, the company repurchased a total of 288.262 million shares in the capital market, with a repurchase amount of about 266 million yuan; as of April 25, the company had repurchased a total of 545,000 shares in 2024, with a repurchase amount of about 4.49 million yuan.
In 2023, the company achieved revenue of 4.98 billion yuan, the same as the previous year; gross profit of 9.3 billion yuan, a year-on-year decrease of 1.6%, gross profit margin of 18.6%, a year-on-year decrease of 0.2 pct; net profit to mother was a loss of 950 million yuan, a year-on-year decrease.
Comment: Focus on core business, optimize the portfolio of managed projects, improve cash flow, and wait for profits to stabilize.
1) Focus on core business and improve the quality of development. After experiencing changes in the external economic environment, related real estate business shocks, and equity restructuring, the company moved from rapid growth in the past to high-quality development, focusing on core business. In 2023, property management/ non-owner value-added/local life/ community value-added/digital intelligence technology achieved revenue of 39.4/1.6/5.1/3.2/0.6 billion yuan respectively, with a year-on-year growth rate of +7.1%/-63.5%/+5.3%/-4.7%/-31.7%.
In 2023, the company continued to reduce the number of projects providing case services to housing enterprises experiencing a liquidity crisis. Non-landlord value-added business continued to shrink, with gross profit of 18.51 million yuan. The gross profit share fell to 2.0% from 8.6% in the same period last year. Subsequent real estate industry had limited room to directly affect the company's revenue and profits; on the other hand, property management and local life achieved steady growth as a strategic development business, accounting for about 76.8% of total gross profit.
2) Optimize the portfolio of managed projects and steadily increase the property fee collection rate. The company has a strong competitive advantage in the southwest region. By the end of 2023, there was a total management area of 270 million square meters, of which independent third parties accounted for 55.3%, and the southwest region accounted for 49.7%; in 2023, the company added 48.8 million square meters of managed area (including 35.8 million square meters of residential buildings, accounting for 73.4%). The company terminated 35.7 million square meters of projects during the year, mainly housing resettlement projects and non-residential projects with low repayment guarantees to avoid the continuous net outflow of project cash flow and drag down the company's development; the collection rate of small property management service owners in 2023 was 91.2%, a significant increase from 2022 (88.1%).
3) Wait for profit stabilization and further improvement in cash flow. In 2023, the company's management expenses ratio was 12.1%, compared to 11.1% in the same period last year; net operating cash flow inflow was 450 million yuan, an improvement over the same period last year of 390 million yuan.
As of the end of 2023, the total amount of the company's trade receivables was about 2.9 billion yuan (680 million yuan for related parties), with impairment provisions of 1.37 billion yuan; total other receivables of 1.27 billion yuan (510 million yuan for related parties), an impairment provision of 820 million yuan (260 million yuan compared to the end of 2022), and related party loans receivable of 1.6 billion yuan have already been calculated, and the loan has an asset guarantee worth about 2.07 billion yuan; overall, the deduction of receivables is sufficient, and the subsequent impact on the company is limited. profitability Steady recovery.
Profit forecasting, valuation and rating: The company adheres to the strategy of deep regional cultivation, and has a scale advantage and strong competitiveness in the southwest region. Considering that the company has experienced obvious business adjustments, profit recovery requires further observation. At the same time, the receivables repayment situation requires further tracking. Based on the principle of prudence, we adjusted the company's 2024-25 net profit forecast to 3.1/4.1 billion yuan, adding the 2026 forecast to 50 million yuan, corresponding to EPS of 0.49 (original forecast 0.95) /0.66 (original forecast 1.07) /0.80 yuan. PE valuation was 17/13/11 times. The company's operating independence increased after Boyu's takeover was completed. Maintain an “Overweight” rating.
Risk warning: Increased competition for external development has led to a decline in profit margins, and the impairment of trade receivables is uncertain.