The scale of settlement declined, and the gross margin of the development business declined. In the first quarter of 2024, the company achieved operating income of 61.59 billion yuan, down 10.0% year on year, mainly due to the year-on-year decline in the company's real estate development business contribution in the first quarter; the company's net loss to mother was 360 million yuan, down 125.0% year on year, mainly affected by the decline in settlement scale and the decline in gross margin of development business; before tax and surcharges, the gross margin of the company's development business was 10.5%, down 6.7 percentage points; the overall gross profit margin was 10.8%. The year-on-year decline was 4.6 percent.
The debt structure is stable, and project repayment is guaranteed. As of the end of the first quarter of 2024, the company's debt ratio after deducting advance payments was 64.9%, down 0.6 percentage points from the end of 2023, and the net debt ratio was 59.3%; it holds 83.07 billion yuan in monetary capital, which can cover short-term loans and interest-bearing liabilities due within one year. The company's repayment efficiency (current year's repayment amount/current year's contract sales amount) remains above 100%.
Sales declined, and uncarried resources were sufficient. In the first quarter of 2024, the company achieved a contract sales area of 3.911 million square meters and a contract sales amount of 57.98 billion yuan, a year-on-year decrease of 37.5% and 42.8%, respectively; achieved a settlement area of 3.182 million square meters, with a settlement amount of 46.67 billion yuan, a year-on-year decrease of 26.7% and 13.8%, respectively. As of the end of the first quarter of 2024, 23.225 million square meters of sold resources within the scope of the company's consolidated statements had not been settled, and the contract amount was 35.15 billion yuan.
Maintain land investment and store sufficient amounts on hand soil. In the first quarter of 2024, the company added 3 new development projects, with a total construction area of about 362,000 square meters, a planned equity construction area of about 197,000 square meters, and a equity land price of 930 million yuan. As of the end of the first quarter of 2024, the total construction area of the company's projects under construction was 567.57 million square meters, and the total construction area covered by equity was 35.929 million square meters; the total construction area of the planned projects was 30.09 million square meters, and the total construction area covered by equity was 2019.05 million square meters. In addition, the company has also participated in a number of old city renovation projects. According to current planning conditions, the total construction area is 3.739 million square meters.
Diversified businesses are developing in an orderly manner. Wanwuyun continues to promote the high-quality development of multi-space services. In terms of commercial enterprise services, projects such as Haier Group's global headquarters, NetEase Shanghai Xuhui Binjiang Park, and Baidu Beijing branch were added in the first quarter. In the first quarter, the rental housing business (including non-consolidated projects, that is, the parking business) achieved revenue of 833 million yuan, an increase of 7.3% over the previous year. The logistics and warehousing business (including non-consolidated projects) achieved revenue of 970 million yuan in the first quarter, an increase of 1.0% over the previous year. The commercial development and operation business achieved revenue of 2.38 billion yuan in the first quarter (including non-consolidated revenue, excluding revenue from asset-light management projects), an increase of 2.3% over the previous year.
Investment advice: Maintain an “better than the market” rating. We believe that many of the company's businesses still have potential for development, actively deal with debt issues, and receive support from various parties. The company expects EPS of 0.94 and 0.94 yuan in 2024 and 2025. Considering the company's leading position, we gave the company a moderate valuation premium. According to the 2024 10-12XPE level, it corresponds to a reasonable value range of 9.38-11.26 yuan, maintaining a “superior to the market” rating.
Risk warning: The industry faces a total downside risk, and the actual implementation of the company's debt conversion plan requires follow-up.