Leading state-owned enterprises with excellent management capabilities maintain a “buy” rating
Poly Development released its 2024 quarterly report. The company's leading position in the industry is stable, the land storage structure is continuously optimized, financing channels are unobstructed, and capital cost advantages are obvious. It will continue to benefit from relaxed real estate policies and industry pattern optimization.
We maintain our profit forecast. We expect the company's net profit to be 131.9, 142.5, and 15.16 billion yuan respectively in 2024-2026, and EPS of 1.10, 1.19, and 1.27 yuan respectively. The current stock price corresponds to PE valuations of 8.4, 7.8, and 7.3 times, respectively. The company's sales ranking is top, and we are optimistic that the market share will continue to rise and maintain the “buy” rating.
Revenue continued to grow, and the carry-over gross margin and equity ratio dragged down the net profit to the parent company in 2024Q1 to achieve operating income of 49.75 billion yuan, up 24.5% year on year; realized net profit of 3.98 billion yuan, up 0.4% year on year; realized net profit to mother of 2.22 billion yuan, down 18.3% year on year; achieved net operating cash flow of 33.1 billion yuan, basic earnings per share of 0.19 yuan, and gross sales margin and net interest rate were 18.64% and 8.01%, respectively, down 3.23 and 1.92 pcts year on year. The increase in the company's total revenue was mainly due to an increase in the scale of project carry-over, and the decline in profit was mainly due to a decrease in carry-over gross margin and equity ratio.
Sales remained at the top of the industry, and land acquisition intensity was low in the first quarter
The company's 2024Q1 contract area and amount were 36.69 million square meters and 62.98 billion yuan respectively, down 41.8% and 44.8%, respectively. The leading position in the industry is stable; it achieved sales repayment of 57.65 billion yuan, and the overall return rate was 91.53%. The company acquired 4 parcels of residential land in Xi'an, Tianjin and Taiyuan in 2024Q1, with a total land acquisition price of 5.03 billion yuan, land acquisition intensity 8.0%, equity ratio 93%; total land acquisition price in 2023 was 163.2 billion yuan, land acquisition intensity 38.7%, equity ratio 83%, and profit margin before tax on new projects averaged over 15%, with strong profit certainty. The company's completed area in 2024Q1 increased by 42.9% and 5.0%, respectively. As of 2024Q1, the area under construction and to be developed was 8150 and 57.58 million square meters.
The balance ratio continued to fall. Open market financing interest rates were smooth as of 2024Q1. The company's monetary fund balance was 129.55 billion yuan. Total assets and net assets returned to mother decreased by 0.87% and increased by 0.75%, respectively. The balance ratio was 75.88%, down 0.66 percentage points from the end of 2023.
As of the end of 2023, the company's interest-bearing debt balance was 354.3 billion yuan. Comprehensive financing costs decreased by 36BP to 3.56%, and additional financing of 137.1 billion yuan was added during the year, with a comprehensive cost of 3.14%. The company added 20.78 billion yuan in public bond financing in 2024Q1, including 5.4 billion yuan of corporate bonds, with coupon interest rates of 2.9%-3.2%, which remained low.
Risk warning: Industry recovery falls short of expectations, policy relaxation falls short of expectations, and company sales recovery falls short of expectations.