occurrences
On April 29, 2024, the company released its 2024 quarterly report: achieved revenue of 49.748 billion yuan, +24.51% year-on-year; realized net profit of 2,224 billion yuan, or -18.28% year-on-year.
reviews
Current revenue increased, and net profit to mother declined. The company continued to invest on the completion side in the first quarter of 2024, so the increase in completion carry-over volume led to an increase in revenue. However, net profit due to the year-on-year decline was mainly due to: ① the decline in gross margin carried over from the project; ② the decline in the ratio of equity carried over to the project.
The sales scale has steadily ranked first in the industry, and the return of capital has been accelerated. Affected by the general market trend and the company's promotion pace, the company signed sales amount in the first quarter of 2024 was 62.984 billion yuan, or -44.87% year-on-year, with a contract area of 3.668,700 square meters, or -41.84% year-on-year. According to Kerry, the company continues to maintain its leading position in full-caliber sales in the industry. At the same time, the company clung to repayment and achieved sales return capital of 57.651 billion yuan in the first quarter, with a comprehensive sales return rate of 91.53%.
Investments are focused on 38 core cities. From January to January 2024, the company had 4 new expansion projects, including 2 in Xi'an, 1 in Tianjin, and 1 in Taiyuan, all within the 38 core cities that the company focused on. The total land acquisition price of the company in the first quarter was 5.03 billion yuan, and the equity land price was 4.67 billion yuan. The comprehensive land acquisition equity ratio was 92.9%.
The land reserves are abundant to support future sales. By the end of the first quarter of 2024, the company had a total of 635 proposed projects under construction, with an area of 81.5 million square meters and an area to be developed of 57.58 million square meters. Sufficient land storage can guarantee the sustainability of the company's sales.
Investment advice
Affected by the carry-over of the previous high land price project, the company's short-term performance was under pressure. In the future, benefiting from the clear supply side of the industry, the market share may continue to increase, and with the gradual carry-over of high-quality projects in 2024, performance is expected to rise steadily. We keep our profit forecast unchanged. We expect the company's net profit to be 12.75 billion yuan, 13.87 billion yuan, and 15.17 billion yuan respectively in 2024-26, with year-on-year growth rates of +5.6%, +8.8%, and +9.3%, respectively. The PE valuation corresponding to the current price of the company's stock was 8.7/8.0/7.3 times, respectively, maintaining a “buy” rating.
Risk warning
Policies are not boosting the market well; market confidence continues to decline; competition in the land market intensifies.