Description of the event
The company achieved operating income of 549.319 billion yuan in the first quarter, up 4.67% year on year; attributable net profit of 14.922 billion yuan, up 1.20% year on year; net profit after deduction of 14.739 billion yuan, up 1.1% year on year.
Incident comments
Q1 Revenue grew steadily, which led to an increase in net profit due to mother and net profit after deducting non-net profit. The company continued to improve the level of development of its main business, deepened project implementation management, and achieved steady growth in revenue. In the first quarter, it achieved operating income of 549.319 billion yuan, an increase of 4.67% over the previous year; attributable net profit of 14.922 billion yuan, an increase of 1.20% over the previous year; and net profit after deduction of 14.739 billion yuan, an increase of 1.1% over the previous year.
Looking at orders, overseas orders grew rapidly in Q1. Looking at new orders, the construction industry signed 1110.7 billion yuan, up 14.3% year on year, including 806.2 billion yuan for housing construction, up 11.4% year on year, 30.5 billion yuan for infrastructure, up 23.2% year on year, 4 billion yuan for survey and design, a decrease of 3.6% year on year. By region, new domestic contracts amounted to 1088.3 billion yuan, an increase of 13.9% year on year, and 22.4 billion yuan new overseas signings, up 38.4% year on year.
The company's expense ratio increased year on year, and gross margin decreased slightly. The company's comprehensive gross profit margin for the first quarter was 8.09%, down 0.01pct year on year. In terms of cost ratio, the company's expense ratio for the first quarter was 3.76%, up 0.10pct year on year. Among them, sales, management, R&D and finance expenses changed year-on-year to -0.03, -0.05, -0.07, 0.26pct to 0.30%, 1.47%, 1.15%, and 0.83% year-on-year, respectively. Taken together, the company's net profit margin for the first quarter was 2.72%, down 0.09pct year on year. 0.09pct The company continues to promote business transformation and raise the level of detailed cost control, but due to exchange rate fluctuations, the increase in the company's total profit was slightly lower than the increase in revenue.
Q1 Cash flow outflow increased year over year, and revenue ratio decreased year over year. The company continued to carry out special actions to improve cash flow management, strengthen the governance of business sources, improve the cash flow budget leadership mechanism, and improve basic cash flow management. The net operating cash flow outflow increased year-on-year in the first quarter due to the combination of reduced sales payments from real estate business and an increase in land purchases. The net cash flow from operating activities in the first quarter was 96.595 billion yuan, an increase of 31.171 billion yuan over the previous year, with a year-on-year decrease of 1.48 pct; at the same time, the company's balance ratio increased by 0.28 pct to 74.76% year on year, and accounts receivable turnover days The year-on-year increase was 6.75 to 42.66 days.
In the future, as the reform of state-owned enterprises continues to advance, the impairment of superimposed companies narrows, and performance and valuation are expected to increase simultaneously. The company's Zhonghai Real Estate is ranked second in the industry in terms of sales scale. The rest of China Construction Real Estate is also relatively large, and land storage is concentrated in Tier 1 and 2 cities. Looking at 2023, more than 90% of the annual land reserves were in Tier 1 and 2 cities. Among them, first-tier cities, municipalities directly under the Central Government and provincial capitals such as Beijing, Shanghai, and Guangzhou account for more than 83% of the new land reserves. The land reserve structure has been further optimized, and the depreciation pressure is expected to gradually narrow in the future. In addition, recent assessments of state-owned enterprises continue to advance, and related management measures and communication efforts may continue to improve, thus boosting the company's market capitalization. It is expected to achieve a performance of 58.5 billion in 2024, which is estimated at a 20% dividend rate, corresponding to the current dividend rate of about 5%. The company's net profit for 2024-2026 is estimated to be 585.25, 630.87, and 66.959 billion yuan, corresponding PE valuations of 3.81, 3.54, and 3.33 times, maintaining a “buy” rating.
Risk warning
1. The macroeconomic growth rate falls short of expectations;
2. Payback of accounts receivable falls short of expectations.