Nandu Property released its 2023 annual report. The company achieved revenue of 1,851 billion yuan in 2023, +0.23% year over year; net profit to mother of 186 million yuan, +27.69% year over year; net profit after deducting non-return to mother of 70 million, or -36.59% year over year.
Revenue is progressing steadily, and net profit to mother and operating cash flow have increased
The company's revenue in 2023 was 1,851 billion, +0.23% year-on-year, mainly due to the increase in the scale of property service projects. Net profit attributable to mother was 186 million, +27.69% YoY. During the reporting period, the main business cost was 1,553 billion yuan, +4.64% year over year. The revenue growth rate was lower than the cost growth rate mainly due to the low gross margin of market expansion projects and the decline in gross margin due to increased competition. However, the company also increased its repayment efforts. During the reporting period, the net cash flow from operating activities was +18.75% year over year.
Changes in fair value increased profits, and value-added services faced growth pressure. In 2023, the company's net profit to mother was 196 million, +26.38% year over year. Among them, non-recurring profit and loss increased from 35 million yuan in 2022 to 115 million yuan in 2023, +232.38% year over year, mainly due to the listing of Anbang Guards invested by the company on the A-share main board, after deducting net profit of 70 million yuan, or -36.59% year over year. During the reporting period, the main business revenue was 1,848 billion yuan, +0.24% year over year. From a product perspective, property infrastructure services achieved positive revenue of 1,624 billion yuan, +2.16% year over year. Property value addition, non-landlord value-added, and asset management service revenue all declined year over year, -12.33%, -43.28%, and -14.24%, respectively. While the core business property services continued to grow, we think it was related to the decline in overall market demand and owners' purchasing power.
Continuing to cultivate the Yangtze River Delta, the non-residential sector deepened, and external development efforts were maintained until the end of the reporting period. The company had signed a total of 722 projects, with a cumulative total contract area of 886.8854 million square meters. The Yangtze River Delta area accounted for 88.38%, +1.38% over the same period, continuing to consolidate the advantages of the Yangtze River Delta region. In 2023, the company signed 100 new projects, with a new contract area of 10.22,900 square meters, of which residential projects accounted for 46.4%, commercial projects accounted for 34.9%, urban services accounted for 18.7%, and non-residential projects developed over 50% of the new area, deepening the layout of non-residential business formats. In addition, the company added 3 new joint ventures during the reporting period, all of which have achieved new project development.
Investment advice: Nandu Property's performance is progressing steadily, continues to be deeply involved in the Yangtze River Delta, has a diversified national layout, and is in good financial condition. Considering that the overall industry is facing downward pressure and affected by the decline in future purchasing power on the owners' side, we adjusted the company's net profit for 2024-2025 to 191 million and 194 million (previous values were 203 million and 217 million), introduce a profit forecast of 198 million for 2026, and maintain the company's “buy” rating.
Risk warning: Business area concentration is too risky, profits for newly undertaken projects are low, and operating costs are rising too fast.