Introduction to this report:
The company's carryover accelerated in the first quarter of 2024, but profit margins continued to bottom out; the land acquisition focus was on core cities, and the land acquisition intensity of leading housing companies was higher than the industry average.
Key points of investment:
The performance was in line with expectations, and the rating for increasing holdings was maintained. In the first quarter of 2024, the company achieved operating income of 23.7 billion yuan, an increase of 58.2% over the previous year; net profit to mother was 300 million yuan, an increase of 22.2% over the previous year.
Considering the company's equal emphasis on development and operation, and focusing on the second growth curve, the core high-quality cities and projects will experience performance improvements, maintaining the 2024-2026 EPS of 0.79/0.85/0.94 yuan, respectively, and maintaining the target price of 13.65 yuan.
The carry-over is speeding up, but profit margins are still bottoming out. In the first quarter of 2024, the company's settlement revenue reached a record high for the same period. Although the overall gross margin increased by 1.9 pct to 14.5% during the same period, the company's net profit margin continued to decline 0.4 pct to 1.4% year on year due to a year-on-year decrease of 85.3% in equity law investment income and a 296.0% increase in profit and loss for minority shareholders.
Land acquisition in 2024 focused on core cities, and the land acquisition intensity of leading housing enterprises was higher than the industry average. In the first quarter of 2024, the company achieved a land acquisition amount of 9.2%, a year-on-year increase of 9.2%, achieving a land acquisition area of 480,000 square meters, a year-on-year decrease of 35.8%. The average land acquisition price was 20,766 yuan/square meter (the average land acquisition price for the same period in 2023 was only 12,201 yuan/square meter), proving that the company's resource investment adheres to the “core 6+10 cities”.
Furthermore, the company's land investment intensity also increased from 13% in the first quarter of 2023 to 25% in 2024, which means that the land acquisition intensity of leading housing companies is better than the industry average.
Focus on cultivating a second growth curve around the three types of business: development business, asset operation, and urban services. In 2023, the share of the company's development business fell below 90% of revenue for the first time, accounting for 87.8%. On the other hand, the share of asset operations and urban services increased from 2.3% and 7.2% in 2022 to 3.4% and 8.6% respectively, indicating that the company is moving towards diversified and stable operation.
Risk warning: The market has declined beyond expectations, and the company continues to accrue large-scale impairment.