Description of the event
The company achieved revenue of 3.72 billion yuan (+12.7%), net profit to mother of 190 million yuan (+3.3%), and net profit of 180 million yuan (+10.5%) after deducting non-return to mother in 2024Q1.
Incident comments
Performance grew steadily, and gross margins were under slight pressure, but rates were well controlled. By the end of 2024Q1, the number of projects managed by the company reached 2,155, and the management area reached 374 million square meters (+18.7%), driving revenue +12.7% year-on-year to 3.72 billion yuan. Gross margin was under slight pressure. The 2024Q1 company's comprehensive gross profit margin was 11.7% (-0.6pct), which suppressed performance to a certain extent; however, rate control was effective. In particular, financial expenses declined markedly after interest-bearing liabilities declined further, offsetting the downward impact on gross margin to a certain extent. In the end, the company achieved net profit of 190 million yuan (+3.3%) to mother, and the overall growth was steady. In terms of follow-up prospects, the company's management scale and revenue are expected to increase steadily under the two-wheel drive of endogenous external development. There is limited room for gross margin to decline again, interest expenses will be drastically reduced after interest-bearing debt continues to shrink, and the company's future performance is expected to continue to move forward steadily.
The advantages of non-residential businesses continue to strengthen, and multiple models actively obtain high-quality projects. The non-residential business format is the company's traditional advantage. As of the end of 2023, the non-residential business sector accounted for 61.9% of the company's management scale. This year, the company's dominant position continued to strengthen. 2024Q1 successfully won bids for various major projects such as Guangzhou International Finance City and China Life Insurance Building, and continued to expand in the fields of finance, hospitals, rail transit, etc., such as winning the bid for service projects such as 50 stations on Shanghai Rail Transit Line 3 and 4. Driven by Endogenous Outbound Two-wheel Drive, the company's property management business achieved a new contract amount of 791 million yuan in the first quarter, making a good start for the whole year. Multiple models are actively being expanded, and the overall business customer base continues to be deepened, and well-known major customer projects such as ZTE and Jingdong continue to win bids; successful cooperation with local state-owned assets in Foshan in the joint venture business is expected to continue to obtain high-quality projects in the future.
Value-added services are steady, moderate and positive, and the asset management business is running smoothly. The platform's value-added services accelerate business transformation, actively abandon some low-margin businesses, and seek additional profit points in multiple dimensions. The total live streaming sales of its own live streaming platform “Recruit Xiaobao” in the first quarter increased fivefold over the same period last year; the first quarter sales of storage and organization services added +41% year-on-year; strategic cooperation with Youbao to improve the profitability of public area resources; the number of charging stations connected has exceeded 25,000, and it continues to expand the city-level charging pile market in Zhanjiang and other areas. Professional business performance was good, and surplus facilities won bids for many high-quality projects at the IFM circuit; Construction Technology also successfully won bids for large-scale park projects such as Kweichow Moutai Liquor Store, with a total contract amount exceeding 20 million yuan. The asset management business has become an important gripper for the company to increase profits. 2024Q1 maintains a good operating trend with commercial sales of +27.6% year-on-year and +7.2% year-on-year in the same store; the property rental business is dominated by stable operation, stabilizing the existing customer base while focusing on potential demand.
Central enterprise property management leaders are expected to move forward steadily for a long time, and there is still room for repair in valuations. In addition to the parent company's support, the company is actively expanding its market, and the main property management business is expected to grow steadily; after repaying 1.5 billion tickets in the first quarter, the company's interest-bearing debt is still expected to decline further, continuing to boost profit expectations; focusing on cash flow control and shareholder returns, the 2024-2026 cash dividend ratio will not be less than 25%. Considering subsequent stable cash return, the possibility of further increasing dividends is not ruled out; property management margin repair and weight separation expectations are also potential hidden options for the company's profit and valuation repair. The company's net profit for 2024-2026 is estimated to be 8.7/10.1/1.17 billion yuan, respectively, +18.5%/+15.8%/+15.5% year-on-year, corresponding to the current valuation of 12.3/10.6/9.2X, maintaining a “buy” rating.
Risk warning
1. The company's property management profit margin repair progress fell short of expectations;
2. The progress of the separation of priorities fell short of expectations.
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