Core views:
Depreciation dragged down full-year results, and core net interest rates bottomed out and rebounded. The company disclosed its annual report for '23 and its quarterly report for '24. In '23, Binjiang achieved revenue of 70.4 billion yuan, +70% year over year, operating profit of 5.1 billion yuan, -5% year over year, and net profit of 2.5 billion yuan, or -32% year over year. 24Q1 revenue of 13.7 billion yuan, +36% year on year, operating profit of 1.2 billion yuan, -11% year on year, net profit to mother of 700 million yuan, +18% year on year. The company's settlement revenue increased dramatically in '23, and the gross profit level remained high. The decline in performance was mainly due to depreciation of 4.3 billion yuan, a drop in investment income of 1 billion yuan, and the impact of tax measurement. The return on investment income and the core net interest rate after impairment was 4.9%, +0.2 pct year on year, and began to bottom up.
The ranking continues to rise, and sales are progressing steadily. The company's sales amount in '23 was 153.5 billion yuan, -0.3% year-on-year, and the national market share was 1.3%, exceeding the sales target of 1% market share at the beginning of the year. According to Clery, Binjiang ranked 11th in sales in '23, up 2 places from '22, and continued to rise to 8th place in 24Q1.
The investment is focused on Hangzhou, and the expansion of cooperation between China and China is strongly controlled. In '23, the company acquired 56.7 billion yuan of land, with Hangzhou accounting for 87%. The expansion of cooperation reduced the company's land acquisition equity ratio to 44% in '23, down 8 pcts from '22. More than 95% of cooperative projects were handled by the company, and Binjiang maintained strong control over the project.
Balance sheets have improved, and financing costs have declined. Binjiang's interest-bearing debt in '23 was 41.5 billion yuan, -22% year over year, net debt ratio was only 15%, down 40 pct year on year, and short cash debt ratio was 2.42, +0.75 year on year. The financing cost pressure was reduced by 0.4 pct to 4.2%, and the company's operating safety was greatly improved.
Profit forecasting and investment advice. Binjiang maintained steady and progressive sales performance during the market downturn. Through sales repayments and debt reduction, the company currently has sufficient settlement resources, and depreciation pressure on non-Hangzhou projects has been released to a certain extent. The company expects net profit to be 3.5 billion yuan or 4.5 billion yuan over 24-25 years, +39% and +27% over the same period, corresponding to 5.9x and 4.7xPE. In terms of reasonable value, we estimated NAV of 38.7 billion yuan based on the 2013 financial report, and the corresponding company's reasonable value was 12.44 yuan/share, maintaining a “buy” rating.
Risk warning. Future fundamental performance falls short of expectations; future financing environment will be tightened, channel control will be stricter, credit investment will be reduced; supply-side reforms will clear up the impact sentiment, etc.