Incident: The company released its 2023 annual report, achieving annual revenue of 70.44 billion yuan, a year-on-year increase of 69.7%; net profit to mother of 2.53 billion yuan, a year-on-year decrease of 32.4%.
Pre-sale housing payments support future performance, and the financial situation continues to be optimized. In 2023, the company achieved operating income of 70.44 billion yuan, an increase of 69.7% year on year; realized net profit of 2.53 billion yuan, down 32.4% year on year, mainly affected by increased preparation for falling inventory prices in the current period; advance housing payments not settled at the end of the period were 143 billion yuan, an increase of 9.7% over the beginning of the year. The company maintains a reasonable level of interest-bearing debt, and the “three red lines” monitoring indicators continue to maintain the “green level”.
The amount of consolidated interest-bearing debt at the end of the period was 41.52 billion yuan, down 12.03 billion yuan from the end of the previous year. Bank loans accounted for 80%, and direct financing accounted for 20%. The balance ratio after deducting advance payments is 56.4%, the net debt ratio is 15.1%, short-term debt accounts for 32.5%, and the short-term cash debt ratio is 2.4 times. The average cost of financing was 4.2%, down 0.4 BP from the end of the previous year. A total of 121.7 billion yuan of bank credit was granted at the end of the period, an increase of 2.9% over the end of the previous year. The remaining amount of $81.6 billion could be used. At the end of the period, the amount of unissued corporate bonds was approved at 1.55 billion yuan, the amount of unissued short-term financing notes was registered at 4.9 billion yuan, and the amount of winning notes was 3.5 billion yuan.
Sales are good, and high-quality soil storage has been added. Sales in 2023 were 153.47 billion yuan, which is basically the same as the previous year. Kerry ranked 11th, up 2 places from 2022, and won the Hangzhou Market Sales Championship for 6 consecutive years; equity sales cash returned 73.2 billion yuan, a record high. Thirty-three new land reserve projects were added, including 27 in Hangzhou. Hangzhou's market share was further consolidated; the total planned construction area of the new projects was 3.3 million square meters, and the equity land amount was 25.6 billion yuan. At the end of the period, the total land storage area was 13.2 million square meters. Hangzhou accounted for 60% of the land storage, while non-Hangzhou cities in Zhejiang Province, including second-tier and third-tier cities with a solid economic foundation, such as Ningbo, Jinhua, Huzhou, and Jiaxing, accounted for 25%, and 15% outside Zhejiang Province.
Diversified businesses are progressing steadily, and new progress has been made in the pension business. In terms of leasing business, at the end of the period, the company held about 378,000 square meters of office buildings, commercial buildings, community buildings and apartment areas for rent, achieving rental income of 358 million yuan and a book value of 8.58 billion yuan in investment real estate. The company restarted the contract construction business segment, which played a complementary role in the development business. The first community-embedded high-quality nursing institution and home, Yuhongfu Elderly Home, launched by the health service brand “Binjiang Hejia”, has officially opened.
Profit forecasting and investment advice. The compounded growth rate of the company's net profit to mother in 2024-2026 is expected to be 10.2%.
Considering the company's steady sales performance and abundant land reserve projects, the company was given 8.5 times PE in 2024, with a target price of 8.08 yuan, maintaining a “buy” rating.
Risk warning: risks such as completion and delivery falling short of expectations, sales falling short of expectations, and falling short of expectations in real estate easing policies.