Event: The company released its 2023 full-year results report. In 2023, the company achieved revenue of 72.15 billion yuan (yoy +19.4%) and achieved net profit of 3.47 billion yuan (yoy -29.0%).
The revenue growth rate remains high, outstanding resources are abundant, and the quality of new resources is excellent. Throughout 2023, the company achieved operating revenue of 72.15 billion yuan, an increase of 19.4% over the previous year; by the end of 2023, the company's contract debt was 93.02 billion yuan, +15.7% year-on-year compared to the previous year of $80.39 billion, which could cover 1.3 times the revenue of 2023. Outstanding resources were sufficient, and the performance reservoir remained high. In 2023, the company added 23 new parcels of land, with a total floor area of 4.968 million square meters. They are all located in core Tier 1 and 2 cities, and the new projects are of sufficient quality and quantity.
Due to multiple factors, the mother's net profit was under pressure, and management rates were greatly optimized. In 2023, the company achieved net profit of 3.47 billion yuan, or -29.0% year-on-year. The main reasons for the year-on-year decline in the company's net profit to mother were: ① Affected by structural adjustments in the real estate industry, the gross margin of the company's real estate development and sales business recorded 17.98% in 2023, -2.27pct year on year; ② For the whole of 2023, the company calculated asset impairment of 1.59 billion yuan, and only 760 million yuan in the same period last year. The company's rate control has achieved remarkable results. While the company's revenue increased year-on-year in 2023, the company's management expenses reached 1.485 billion yuan, -15% over the same period last year.
Sales bucked the trend, and the results of clamping down on repayment were remarkable. In 2023, in the face of a deeply adjusted real estate market, the company focused on sales, new listings and inventory sales, and achieved sales of 125.99 billion yuan throughout the year, +4.8% year-on-year, and remained stable in the 100 billion dollar camp for 4 consecutive years. During the reporting period, the company focused on sales repayment and achieved a repayment amount of 84.689 billion yuan, an increase of 17.2% over the previous year. At the same time, the company has formed a “3+1" business layout.
East China has annual sales of 69.271 billion yuan, accounting for 55.0%, laying the foundation for the company's sales; South China has annual sales of 31,019 billion yuan, accounting for 24.6%; Zhuhai has annual sales of 19.127 billion yuan, accounting for 15.2%, which is the leading position in Zhuhai; the northern region has annual sales of 6.572 billion yuan, accounting for 5.2 percent and a dividend rate of nearly 50%, with a dividend rate of 6%. The high dividend highlights the value of state-owned enterprises. The company plans to pay a cash dividend of 3.70 yuan (tax included) for every 10 shares. The company's 2023 dividend rate is nearly 60%. Based on the closing price on April 26, the company's dividend rate is as high as 6%. With the steady operation of state-owned enterprises and high dividends, the company has provided certain definite value under uncertain industry fundamentals.
Profit forecasting and valuation: The company's revenue growth rate remains high, the quality and quantity of new resources added is sufficient, and steady operation and high dividends highlight the value of state-owned enterprises. We expect the company's revenue for 24-26 to be 771.3, 832.3, and 90.11 billion yuan, respectively, and net profit of 18.9 billion yuan, 19.6 billion yuan, and 2.04 billion yuan, corresponding to PE of 9.1, 8.8, and 8.5 times, respectively, maintaining the “recommended” rating.
Risk warning: The real estate market continues to be sluggish; policy implementation falls short of expectations; rate control is not effective.