The carry-over scale increased year-on-year, and revenue and profit rose rapidly. In the first quarter of 2024, the company's revenue was 23.747 billion yuan, up 58.22% year on year; net profit was 936 million yuan, up 120.55% year on year; net profit to mother was 332 million yuan, down 22.22% year on year; non-net profit deducted from mother was 292 million yuan, up 8.00% year on year. The main reason for the year-on-year increase in revenue and profit is the year-on-year increase in the carry-over scale of the real estate development business, the increase in gross margin, and the decline in the period expense ratio. The company's contract debt balance at the end of March was 17.507 billion yuan, down 1.83% from the previous year, and there are sufficient carry-over resources.
Sales performance in the first quarter was under pressure due to the downturn in the industry. In March 2024, the company achieved a contracted sales area of 707,400 **** meters, achieving a contracted sales amount of 19.156 billion yuan. From January to January 2024, the company achieved a total contracted sales area of 1.6659 million **** meters, a year-on-year decrease of 45.43%, and achieved a cumulative signed sales amount of 40.208 billion yuan, a year-on-year decrease of 44.36%.
Increased profitability and continued cost reduction. In the first quarter of 2024, the company's gross margin was 14.50%, up 1.88 percentage points from the same period in 2023; the company's net profit margin was 3.94%, up 1.11 percentage points from the same period in 2023; and the company's expenses ratio was 5.92%, down 2.75 percentage points from the same period in 2023.
As of the end of the 1st quarter of 2024, the company's balance ratio was 67.71%, down 1.38 percentage points from the same period in 2023. As of the end of the 1st quarter of 2024, the company's monetary cash holdings were 83.206 billion yuan, a year-on-year decrease of 14.49%. In the 1st quarter of 2024, the net cash flow from the company's operating activities - 10.611 billion yuan, turned negative, mainly due to the year-on-year decrease in sales repayments in the 2024 1Q.
Sales restrictions have been lifted in part of the issuance of new shares. On June 16, 2023, the company received approval from the China Securities Regulatory Commission, agreeing that the company would issue shares to raise no more than 8.5 billion yuan in supporting capital. On October 19, 2023, the company issued additional shares to specific targets and listed on the Shenzhen Stock Exchange. The number of shares issued was 720 million, all tradable shares with limited sales conditions. As of April 22, 2024, the restricted shares of the 12 counterparties have reached the conditions for lifting the sales restrictions (the sales restriction period promised at the time of issuance was 6 months), and the number of restricted shares listed and in circulation was 584 million shares, accounting for 6.45% of the company's total share capital.
Investment advice: Maintain an “better than the market” rating. We forecast the company's EPS of 0.92 and 1.26 yuan respectively in 2024 and 2025. Considering that the company maintains a competitive advantage in sales and has a strong financing background, in the context of current market supply-side reforms, we are giving the company a moderate valuation premium, that is, 15-17XPE in 2024, with a reasonable value range of 13.85-15.70 yuan, maintaining a “superior to the market” rating.
Risk warning: The industry faces the risk of declining sales and falling short of policy expectations.