On April 29, 2024, Vanke A disclosed its 2024 quarterly report. In the first quarter, it achieved operating income of 61.59 billion yuan, -10.1% year-on-year; realized net profit to mother of -360 million yuan, -125.0% year-on-year.

Decrease in settlement scale and gross margin, decline in revenue, profit loss: The decline in 1Q24's revenue was mainly due to a decline in the settlement scale of the development business, and net profit loss due to the decline in settlement volume. In addition to the decline in settlement volume, the 1Q24 settlement gross profit margin was 10.8%, a year-on-year decrease of 4.6 pcts.

The overall development business contracted, ranking third in the sales scale industry: 1Q24's development business contributed 46.67 billion yuan in revenue, -13.8% year over year; the gross profit margin of the development business was 10.5%, down 6.7 pcts year on year.

The 1Q24 company achieved sales of 58 billion yuan, 42.8% compared with the same period, ranking third in the industry; by the end of the first quarter, the company still had an outstanding sales amount of 35.1 billion yuan, which provided some support for the year's revenue scale.

The revenue of the operating service business continued to grow, and the gross margin increased steadily: 1Q24's operating service business contributed 10.95 billion yuan in revenue, +12.0% year over year; the gross profit margin of the operating business was 18.9%, up 5.4 pcts year on year. The logistics and warehousing business achieved revenue of 970 million yuan, +1.0% year on year; rental housing achieved revenue of 833 million yuan, +7.3% year over year; commercial development and operation achieved revenue of 2.38 billion yuan, +4.8% year over year.

Multi-channel financing actively promotes asset disposal and revitalization: 1Q24 achieved a repayment amount of 4.2 billion yuan for the company's bulk assets, and CICC Yinli Consumer REIT raised a net capital of 3.26 billion yuan. As of 1Q24, the company's monetary capital was 83.07 billion yuan, which can cover interest-bearing liabilities due within one year. The comprehensive cost of new domestic financing was 3.33%, down 28 BP from the full year of 2023.

We kept the company's profit forecast unchanged. Net profit due to mother for 2024-2026 was 12.51 billion yuan, 12.75 billion yuan, and 12.90 billion yuan respectively, with year-on-year growth rates of 2.8%, 1.9%, and 1.2%, respectively.

The current price of the company's stock is 7.2/7.1/7.0 times the PE valuation. It is expected that in the future, the company's development business will shrink, the contribution to the management and service business will increase, stabilize the basic market, and maintain the “gain” rating.

Risk warning

Sales in the real estate market are sluggish; operating service business is not developing smoothly; other housing enterprises have defaulted