The carry-over scale continued to shrink, and rate increases during the period dragged down gross profit margins, and Jindi Group published its 2024 quarterly report, maintaining the “increase in holdings” rating. The decline in the company's project carry-over scale led to a decline in revenue, and the decline in carry-over gross margin dragged down net profit to mother. The company has relatively sufficient land reserves, focusing on Tier 1 and 2 cities, continuous optimization of debt structures, and steady diversified business operations. We maintain our profit forecast. We expect the company's 2024-2026 net profit to be 96, 10.5, and 1.24 billion yuan, EPS 0.21, 0.23, and 0.27 yuan. The current stock price corresponds to PE of 17.5, 16.1, and 13.6 times, maintaining the “increase” rating.

The carry-over scale declined sharply, and the rate for the period increased markedly year-on-year

The company achieved revenue of 6.964 billion yuan in 2024Q1, a year-on-year decrease of 51.5%; net profit to mother of 276 million yuan, a year-on-year decrease of 154.4%; net operating cash flow of -919 million yuan, basic earnings per share -0.06 yuan, and net sales margin decreased 4.84 pct to -3.30% year on year. The decline in the company's revenue was mainly due to the year-on-year decline in the carry-over scale of real estate projects. On the one hand, profit declined due to a decrease in the carry-over scale; on the other hand, the company's carry-over project was under pressure, and gross margin fell to 14.92% (2023Q1 was 17.50%). Among them, sales, management and finance rates increased 1.50, 4.34, and 5.92pct to 4.72%, 10.33%, and 7.67%, respectively, compared to 2023Q1, and the rate increased markedly during the period.

The decline in sales widened, and land storage was distributed in high-energy cities

The company's 2024Q1 sales amount was 16.73 billion yuan, down 62.1% year on year; sales area was 984,000 square meters, down 59.5% year on year, ranking 14th in Kerry's sales ranking. The company insists on deep-cultivating high-energy cities. 2024Q1 has yet to acquire land. The total investment amount for land acquisition in core cities such as Shanghai, Hangzhou, Nanjing, and Xi'an in 2023 is about 12.5 billion yuan. The company completed a total construction area of about 278,000 square meters in 2024Q1, and a total completed area of about 1.449 million square meters. By the end of 2023, the company's total land reserves were about 41 million square meters, and equity land reserves were about 18 million square meters, of which Tier 1 and 2 cities accounted for about 73%.

Steady operation of owned properties and continuous optimization of debt structure

The company held 2.695 million square meters of leasable property in 2024Q1, achieving rental income of 763 million yuan, of which the commercial and industrial rental rates were 75% and 79%, respectively. By the end of 2023, the company held monetary capital of 29.74 billion yuan, and the balance of interest-bearing debt was 91.9 billion yuan, a year-on-year decrease of 20.2%; the deducted debt ratio was 61.3%, the net debt ratio was 53.2%, and the weighted average cost of debt financing decreased by 17BP to 4.36%.

Risk warning: The sales recovery process is blocked, diversified business development falls short of expectations, and the company's land acquisition falls short of expectations.