Jinwu Financial News | According to Open Source Securities Research, Shell (02423) 2024Q1 Shell's revenue was 16.4 billion yuan (slightly higher than the agreed estimate of 16.3 billion yuan), due to the fact that the scale of stock housing transactions slightly exceeded expectations; non-GAAP net profit of 1.39 billion yuan (higher than the agreed estimate of 1.03 billion yuan), mainly due to the cost side being better than expected.

According to the bank, the company actively expanded its store network and franchised brands to drive share growth, the home improvement and home furnishing business continued to optimize and iterate as scale grew, and the leasing business expanded rapidly. (1) Real estate transactions: In the short term, the second-hand housing market transaction volume is growing steadily. The volume of second-hand housing transactions on the Shell platform increased 14% year on year in April 2024. The new housing market may face challenges. Residents' expectations are expected to improve under both supply and demand sides of the policy, and pursue share growth and ecosystem development under medium- to long-term stock trends; (2) New business: the home improvement business continues to improve service quality with improving basic capabilities, and the loss rate is expected to narrow as the scale expands; the long-term rental business operation scale is expected to continue to expand rapidly.

The bank said that considering the growth of the real estate transaction business, it lowered the company's 2024-2026 non-GAAP net profit forecast to 79.2/99.2/11.27 billion yuan (previous value of 87.3/105.4 billion yuan), corresponding to a year-on-year growth rate of -19.3%/+25.3%/+13.7%, corresponding to the diluted EPS of 2.2/2.8/3.1 yuan. The intensive introduction of real estate policies has led to the stabilization of the domestic real estate industry. The company's platform-based advantages and store expansion drive continued to increase its share, waiting for the home improvement and rental business to drive a second increase. The current stock price of 43.9 HKD corresponds to 18.1/14.5/12.7 times PE in 2024-2026, maintaining the “gain” rating.