Incident: The company released its 2024 quarterly report. The first quarter of 2024 achieved revenue of 61,594 billion yuan, a year-on-year decrease of 10.05%; net profit to mother - 362 million yuan, compared with 1,446 million yuan for the same period last year.
First-quarter results are under pressure: The company achieved revenue of 61,594 billion yuan in the first quarter of 2024, a year-on-year decrease of 10.05%, and net profit to mother of 362 million yuan, compared with profit of 1,446 million yuan in the same period last year. The decline in revenue and the sharp decline in performance were mainly due to: 1) the decline in settlement scale; the Q1 settlement area in 2024 was 46.67 billion yuan, a year-on-year decrease of 13.8%; 2) the gross margin of the development business fell 6.7 pct to 10.5%, and the overall gross margin fell 4.6 pct to 10.8%. As of the end of the first quarter of 2024, 23.225 million square meters were sold and unfinished within the scope of the company's consolidated statements, corresponding to a contract amount of 35.15 billion yuan, which is expected to support the company's future revenue.
Sales declined cautiously: In terms of sales, in Q1 2024, the company achieved sales volume of 57.98 billion yuan, a year-on-year decrease of 42.8%; sales area of 3.911 million square meters, a year-on-year decrease of 37.5%; corresponding to the average sales price of 14,825 yuan/square meter, a year-on-year decrease of 8.5%. Affected by overall pressure on the industry, the company's sales volume and price in the first quarter were under pressure. In terms of land acquisition, the company added a total of 3 new projects in the first quarter of 2024, located in Yinchuan, Kunming, and Guiyang. The total planned construction area was 362,000 square meters, with an equity land price of 9.3 billion yuan, corresponding to a total land price of 1,839 billion yuan. The calculated equity ratio was 54.42%, of which the Guiyang plot equity ratio was 100%. According to full caliber calculation, the floor price for the additional soil storage is 5080 yuan/square meter, and the corresponding land to goods ratio is 0.34. By the end of the first quarter of 2024, the company had 652.22 million square meters of land on hand, 2.64 times the sales area in 2023, which is expected to support the company's development.
Actively achieve capital return: In Q1 2024, the company's repayment efficiency remained above 100%. As of the end of the first quarter of 2024, the debt ratio after deducting pre-sale accounts was 64.9% and the net debt ratio was 59.3%, strictly controlling the level of leverage. The company adopted various methods to achieve capital return: in Q1 2024, it has repaid 4.2 billion yuan through bulk asset transactions, and operating businesses have achieved asset revitalization through REITs, such as CICC Printing Power Consumer REIT, which raised a net capital of 3.26 billion yuan. In terms of financing, the comprehensive cost of the company's new financing in Q1 2024 was 3.33%, 0.28pct lower than the 3.61% additional domestic financing cost in 2023.
The business went hand in hand: the rental housing business achieved revenue of 833 million yuan in Q1 of 2024, an increase of 7.3% over the previous year, and 7121 new properties were expanded. By the end of the first quarter, the rental housing business had operated and managed 238,000 long-term rental apartments, with a cumulative total of 179,500 units opened, with a occupancy rate of 93.9%. Logistics warehousing achieved revenue of 970 million yuan in Q1 2024, up 1% year on year, of which cold chain revenue was 430 million yuan, up 10.1% year on year. By the end of the first quarter of 2024, logistics and warehousing business had a total leasable floor area of 10.202 million square meters, of which 8.504 million square meters of high-standard warehouses could be leased, with a stable rental rate of 83.9%.
The commercial development and operation business achieved revenue of 2.38 billion yuan in Q1 2024, an increase of 2.3% over the previous year. Of these, the revenue of projects managed by Printing Power was 1.43 billion yuan, an increase of 4.8% over the previous year.
Investment advice: The decline in the company's settlement scale and gross margin in Q1 2024 affected revenue and performance levels. Against the backdrop of pressure on overall sales in the industry, the company's sales declined and land acquisition was cautious. The company has sold unfinished construction and is expected to support development and revenue. The company's repayment efficiency remained above 100% in the first quarter of 2024, and repayments were made through bulk, REITs, etc. Considering the pressure on gross margin, we lowered the company's 2024-2026 net profit forecast to 11.622 billion yuan, 11.866 billion yuan, and 12.234 billion yuan. The corresponding EPS is 0.97 yuan/share, 0.99 yuan/share, 1.03 yuan/share, and corresponding PE is 7.61X, 7.45X, and 7.23X, maintaining the “recommended” rating.
Risk warning: the risk that the macroeconomy falls short of expectations, the risk of real estate sales falling short of expectations, the risk of a sharp drop in housing prices, the risk of business falling short of expectations, the risk of capital return falling short of expectations, and the risk of debt payments falling short of expectations.