occurrences

On April 29, 2024, the company released its 2024 quarterly report. 1Q24 achieved revenue of 131.34 billion yuan, or -21.6% year-on-year; net profit to mother of 600 million yuan, -23.9% year-on-year.

reviews

Revenue and profit all declined, and the current performance of all business segments was under pressure: the decline in 1Q24's revenue was mainly due to a decline in the volume and price of goods operated in the supply chain, and the decline in net profit to mother was mainly due to a certain decline in the current performance of the three major business segments.

Supply chain sector: The 1Q24 segment achieved revenue of 122.64 billion yuan, -24.1% year-on-year, and realized net profit of 770 million yuan, or -8.67% year-on-year. The gross profit margin of the 1Q24 supply chain business was 2.42%, an increase of 0.52 pct over the previous year.

Real estate sector: The 1Q24 segment achieved revenue of 6.59 billion yuan, +13.3% year-on-year, and realized net profit to mother of 57.78 million yuan, compared to -52.47 million yuan in the same period last year. Affected by the market downturn, the gross margin of the 1Q24 sector was 14.55%, down 1.95pct year-on-year.

Home Furnishing Mall Operation Segment: The 1Q24 segment achieved revenue of 2.11 billion yuan and realized net profit of 111 million yuan to mother (not consolidated for the same period last year). Segment contribution losses are mainly due to the phased decline in the occupancy rate of Macallon shopping malls, which led to a decline in revenue and profit due to the provision of concessions to merchants, and an increase in losses due to changes in the fair value of investment real estate.

The real estate sales ranking is stable, and the investment focuses on core cities: the 1Q24 subsidiary C&D real estate sales volume was 31.5 billion yuan, 31% year over year (average growth rate of the top 100 real estate companies -49%), ranking 7th in the industry (ranked 8th in 2023); the subsidiary MediaTek Group had sales volume of 8 billion yuan, -44% year over year, ranking 26th in the housing industry (8th in 2023). According to data from the China Index, the 1Q24 subsidiary C&D Real Estate acquired 4.3 billion yuan, ranking 12th in the industry, mainly in high-quality areas of core cities such as Hangzhou, Xiamen, and Wuhan.

Investment advice

The company has strong supply chain risk control capabilities, and real estate investment and sales are active and steady. It is expected that withholding performance will continue to grow in the future. We kept the company's profit forecast unchanged. Net profit due to mother for 2024-2026 was 6.76 billion yuan, 8.40 billion yuan and 9.32 billion yuan respectively, with year-on-year growth rates of -48.4%, 24.2% and 11.0% respectively. The current price of the company's stock corresponds to the 2024-26 PE valuation of 4.6/3.7/3.3 times, maintaining a “buy” rating.

Risk warning

Commodity prices fluctuated sharply; sales in the real estate market were sluggish; policies fell short of expectations.