Non-residential carry-over led to a decline in revenue, and sufficient saleable resources increased future performance. Maintaining a “purchase” rating, Pudong Jinqiao released its 2024 quarterly report. The company's first-quarter carry-over of non-residential projects led to a decrease in sales revenue, and revenue from leasing, hotel apartments and property management continued to grow. The company has sufficient sellable real estate resources, a steady rise in rental income, and significant location advantages and industrial agglomeration effects. We maintain profit forecasts. We expect the company's net profit to be 14.84, 16.74, and 1,901 billion yuan from 2024 to 2026, corresponding EPS of 1.32, 1.49, and 1.69 yuan. The current stock price corresponds to PE of 9.1, 8.0, and 7.1 times, maintaining a “buy” rating.

No residential projects were carried over, and revenue and profit declined sharply

The company achieved revenue of 910 million yuan in 2024Q1, a year-on-year decrease of 78.7%; realized net profit of 228 million yuan, a year-on-year decrease of 83.4%; achieved net operating cash flow of -153 million yuan, basic earnings per share of 0.2032 yuan, gross sales margin and net interest rate of 65.1% and 25.4%, respectively, down 12.8 and 6.5 percentage points, respectively. The decline in the company's performance was mainly due to the centralized carry-over of the high-margin residential project Biyun Zundian Phase II project in 2023Q1 and the carry-over of no residential projects in 2024Q1, and sales revenue fell 90.7% year-on-year.

Rental properties have continued to grow, and the removal performance of on-sale projects has been excellent

The company vigorously implemented the work of securing business and stabilizing business, and adopted the “investment+incubation+service” linkage strategy. Tenants' business conditions rebounded and improved. 2024Q1 leasing business revenue was 494 million yuan, up 32.2% year on year; hotel apartment revenue and property management service revenue increased 22.0% and 147.6% year on year, respectively. By the end of 2023, the company held a total of about 3.19 million square meters of various operating properties, with an average occupancy rate of 83.3%. 2024Q1, the company's general plant renovation and expansion project on Lot 25 and the North Bund 138 Neighborhood Housing Project Pile Foundation Project commenced.

By the end of March 2024, the removal rate of 449 houses in the company's Biyun Liyue project in the first batch had reached 87%, with a cumulative carry-over amount of 2,241 billion yuan.

The sellable value is abundant, and the financing channels are unobstructed

The company has sufficient saleable residential projects under construction. By the end of 2023, the total construction area of the company's market-based outward sales residential projects reached 1.53 million square meters, with an estimated value of 32 billion yuan. In terms of park resources, the Biyun commercial complex plan was officially approved in February 2024, with a total construction area of about 360,000 square meters, and efforts are being made to start construction within the year. The company's financing channels are unobstructed, 2

In 023, 1 billion yuan of corporate bonds and 1.45 billion yuan of winning notes were issued, respectively, with a coupon interest rate of no more than 3.3%; 2024Q1 issued 1,781 billion yuan of ABS, the head of the Securities Regulatory Commission, with a coupon interest rate of 3%, and unobstructed financing channels.

Risk warning: Project expansion falls short of expectations, industry introduction falls short of expectations, and the risk of new housing price fluctuations in Shanghai.