The scale of revenue has increased steadily, and financial performance is solid and steady. In 2023, the company achieved operating income of 346.8 billion yuan, +23.42% year on year; net profit to mother of 12.067 billion yuan, or -34.13% year on year; gross profit carry-over ratio of 16.02% for the year, down 5.99 percentage points year on year, mainly due to an increase in the carry-over share of low-profit projects. At the same time, due to the principle of prudence, the company calculated a total impairment of about 5 billion yuan on inventory and long-term equity investments, and the performance was solid and steady. As of the end of 2023, the company's contractual liabilities were 377.2 billion yuan, with a high degree of future income security.
The sales scale is leading the market, and the market share is steadily increasing. In 2023, the company achieved sales volume of 422.2 billion yuan, ranking first in the industry; achieved a sales area of 23.86 million square meters, with sales contributions of nearly 90% located in 38 core cities, an increase of 2 percentage points over the previous year, and the results of deep urban cultivation continued to be prominent. On the other hand, the company's market share in 2023 increased 0.2 percentage points year on year to 3.6%. Among them, the share of 38 core cities reached 6.8%, an increase of 0.7 percentage points over the previous year; there were 27 cities with a market share of more than 10%, and the share ceiling of single cities continued to break through and increase. In addition, the company has stepped up efforts to eliminate stock projects. The annual contract amount and area of the project reached 2,575 yuan and 16.43 million square meters respectively, accounting for 61% and 69% of the annual sales amount and area.
Focus on high-quality expansion and continuous optimization of soil storage structures. In 2023, the company expanded a total of 103 projects, with a total land price of 163.2 billion yuan and an equity land price of 135.9 billion yuan, +26% over the same period. The equity expansion ratio increased 16 percentage points to 83%, and the average profit margin for new projects before tax was over 15%, which has strong profitability.
Specifically, 99% of the expansion amount was located in the core 38 cities. The residential sector accounted for 95% of the value, and the average floor price of the new projects was 15,187 yuan/square meter, thus ensuring development efficiency and removal speed. 40% of the newly acquired projects during the year were opened and contributed more than 30 billion dollars in contract amounts, and all shareholders' investment was recovered during the year of the newly acquired projects in 2022.
The balance and liability structure continues to be optimized, and financing costs are continuously reduced. By the end of 2023, the company's balance ratio, pre-received balance ratio, and net debt ratio were 76.55%, 67.14%, and 61.20%, respectively, down 1.56, 1.34 and 2.37 percentage points from the beginning of the year; the short-term cash debt ratio was 1.28, and the balance of debt maturing within 1 year was 73.7 billion yuan, and the share of interest-bearing debt was 20.82%. On the other hand, the company has sufficient financing space, and costs continue to decrease. By the end of 2023, the company's interest-bearing debt balance was $354.3 billion, a decrease of $27.1 billion from the beginning of the year. Comprehensive financing costs were about 3.56%, down 36 BPs from the end of 2022.
Investment advice: Maintain an “better than the market” rating. Considering that the company's various businesses are solid and steady, actively promoting the majority shareholders' repurchases and increasing the cash dividend ratio, which reflects shareholders' confidence in the company's future development and recognition of long-term investment value, we gave the company a 2024 EPS of RMB 1.07, a 10-12 times PE valuation, with a corresponding market value range of 128-153.6 billion yuan, and a corresponding reasonable value range of 10.69-12.83 yuan per share. Risk warning: Market recovery falls short of expectations. Risk warning: Market recovery falls short of expectations.
Risk warning: Market recovery falls short of expectations.