occurrences
On April 26, 2024, Binjiang Group released its 2023 Annual Report and 2024 Quarterly Report. For the full year of 2023, we achieved revenue of 70.44 billion yuan, +69.7% year-on-year; realized net profit of 2.53 billion yuan, or -32.4% year-on-year. The first quarter of 2024 achieved revenue of 13.70 billion yuan, +35.8% year-on-year; realized net profit of 660 million yuan, or +17.8% year-on-year. For the full year of 2023, we plan to pay a cash dividend of 0.9 yuan (tax included) for every 10 shares, with a dividend rate of 11.1%.
reviews
Significant increase in revenue, and asset impairment reduced net profit: The sharp increase in the company's revenue in 2023 was mainly due to an increase in carry-over area and an increase in the proportion of consolidated projects. The year-on-year decline in net profit due to the year-on-year decline was mainly due to: ① Based on the principle of prudence, inventory and credit impairment losses totaled 4.31 billion yuan, an increase of 3.45 billion yuan over the previous year; ② the increase in the proportion of consolidated projects corresponds to a decline in investment income from joint ventures. Net investment income in 2023 was 1.23 billion yuan, a year-on-year decrease of 990 million yuan; ③ Affected by the market downturn, the company's overall gross profit margin was 16.76% in 2023, down 0.78 pct year on year.
The results of deep cultivation are outstanding, and sales repayment efficiency is good: in 2023, the company's full-caliber sales amount was 1,535 yuan, which is basically the same as the previous year, ranking 11th in the industry (up 2 places from the full year of 2022); it won the Hangzhou Real Estate Enterprise Sales Championship for 6 consecutive years. Seizing sales to promote repayment, equity sales returned 73.2 billion yuan in cash for the whole year, a record high.
The investment focuses on Hangzhou, and the soil storage structure is high quality: in 2023, the company added 33 new projects, including 1 in Ningbo, 1 in Nanjing, 2 in Huzhou, 2 in Jinhua, and 27 in Hangzhou, further consolidating Hangzhou's market share; a total construction area of 3.3 million square meters was added, and the equity land acquisition amount was 25.6 billion yuan. At the end of 2023, the total land storage area was 13.2 million square meters, of which Hangzhou accounted for 60%, inside and outside Zhejiang Province accounted for 25%, and outside Zhejiang Province accounted for 15%.
The scale of interest-bearing debt has declined, and the financial structure is safe and stable: in 2023, the company's three red lines remained stable in the green position, with a balance ratio of 56.4% after excluding advance payments, a net debt ratio of 15.1%, and a short-term cash debt ratio of 2.4. The total amount of interest-bearing debt in 2023 was 41.5 billion yuan, a year-on-year decrease of 12 billion yuan; the interest-bearing debt structure was clear, consisting only of bank loans and direct financing, of which bank loans accounted for 79.8%; comprehensive financing costs were 4.2%, a year-on-year decrease of 40 BP.
Investment advice
The results of the company's deep cultivation in Hangzhou are outstanding. The speed of removal and profit margins are relatively good, and it is expected that future performance will resume growth. Considering gross margin and depreciation pressure, we lowered the company's 2024-25 net profit forecast to 3.27 billion yuan and 4.04 billion yuan (originally 6.14 billion yuan and 7.36 billion yuan), and added the 2026 net profit forecast of 4.66 billion yuan, with growth rates of 29.1%, 23.8%, and 15.3%, respectively. The current price of the company's stock corresponds to the 2024-26 PE valuation to 6.1/4.9/4.3 times, maintaining the “buy” rating.
Risk warning
The implementation of the easing policy fell short of expectations; competition in the land market intensified; and the Hangzhou market declined sharply.