Profitability is expected to recover, and operating cash flow is steady. In 2023, the company achieved revenue of 12.09 billion yuan, an increase of 3.6% over the previous year; net profit to mother - 850 million yuan, mainly affected by non-operating and one-time factors.
The total rate of the company's three expenses rose slightly from 20.3% in 2018 to 21.7% in 2023, which is relatively stable. The company's gross margin increased by 0.8 pp to 9.5% year over year, and is expected to return to normal levels as the industry gradually recovers. The company's net operating cash flow in 2023 was $4.67 billion, with sufficient cash flow. The company's revenue for the first quarter of 2024 was 2.75 billion yuan, down 12.6% year on year, and realized net profit of about 25 million yuan to mother.
The market share of the brokerage business has been rising steadily, and the new housing business is under pressure. The company's brokerage business uses a business model with direct management as the main focus and franchise support. In 2023, it achieved revenue of 4.09 billion yuan, an increase of 15.9% over the previous year, and gross margin increased 3.4 pp to 20.2% year on year. The company focused on core cities. The market share of the Shanghai region increased by 0.7 pp over the same period last year, and maintained a stable market share in the leading market share in Beijing and Hangzhou. In 2023, the company streamlined its inefficient franchise business in non-core cities. At the end of the period, the total number of stores operated was 2,853, with direct management accounting for 81.4%, with about 30,000 agents; the brokerage business achieved GTV of about 222.2 billion yuan, an increase of 10.2% over the previous year. Revenue from the new housing business fell 12.6% year on year, and the total transaction volume (GTV) was about 45.3 billion yuan, down 6.6% year on year, mainly affected by the downturn in the industry.
Strong asset management and operation capabilities, high commercial leasing brand recognition. Asset management revenue in 2023 was 5.76 billion yuan, up 1.9% year on year; achieved GTV of about 16.9 billion yuan, up 2.6% year on year; gross margin increased 0.6 pp to -5.4% year on year, and gross margin was about 13.3%, up 2.0pp year on year without accounting standards. The number of properties managed by the company increased to 271,000 units, up 6.7% year on year; the average number of days left for housing asset management was 8.3 days, down 11.7% year on year, and the occupancy rate reached 96.4%, up 2.3 pp year on year. Commercial leasing and services operate diverse projects such as shopping centers, department stores, and office buildings through the “Kunbaida” brand. The brand enjoys high recognition, and revenue increased 4.6% in 2023.
Accelerate digital transformation and improve overall operational efficiency. The company's R&D investment increased significantly in 2018-2023, and R&D expenses reached 40.1 million yuan by 2023. The average number of monthly active users grew steadily in 2018-2021, then declined but remained high for the next two years. The company effectively integrates real estate brokerage services with intelligent technology, covering a full range of upgrades from improving agent efficiency and optimizing consumer experience to strengthening platform management. In 2023, the proportion of the company's mobile customers further increased, and the share of online listings increased to 14.5%. At the same time, the efficient operation of the SSC Business Opportunity Platform provided more than 2.11 million online business opportunities.
Profit forecast and investment advice: The net profit growth rate for the next three years is expected to be 112.3%/67.2%/62.5%, giving the company 20 times PE in 2026, corresponding to a target price of 2.40 yuan, for the first time covering a “buy” rating.
Risk warning: Risks such as the recovery of real estate sales falling short of expectations and policy easing falling short of expectations.