Key points of investment:

Incidents:

On October 29, 2024, the company announced the 2024 three-quarter report. In 2024, the company's revenue for Q1-Q3 was 4.982 billion yuan, a year-on-year decrease of 6.93%, after deducting non-return net profit of 0.362 billion yuan, a year-on-year decrease of 25.96%; achieving basic earnings per share of 0.39 yuan.

Q3 Real estate sales carry-over, single-quarter performance growth

The company achieved revenue of 2.338 billion yuan in Q3, an increase of 65.02% over the previous month, and net profit after deducting non-return to mother of 0.282 billion yuan, an increase of 492.92% over the previous month.

During the reporting period, the company confirmed sales revenue and gross profit for E3-8, Sunland relocated housing stores, etc., but no real estate sales carry-over was announced during the same period last year, and differences in the carry-over pace of high-margin businesses made the performance growth rate high during the reporting period.

Increased profitability and marginal reduction in cost rates

The company's gross margin for 2024Q1-Q3 was 34.6%, up 3.4pct from 2024H1; sales/management/finance expense ratios were 4.4%/6.2%/6.6%, respectively, down 0.7/1.3/1.6pct from 2024H1; and net profit margin was 9.0%, up 3.4 pcts from 2024H1.

The carry-over of revenue from real estate sales in the company's high-margin business may have led to a marginal increase in the company's gross margin level in the third quarter. Combined with the marginal decline in the three-fee rate, the company's net interest rate increased simultaneously.

The debt structure is stable and the financial situation is healthy

According to iFind, as of 24Q3, the company's net debt ratio/balance ratio after excluding advance payments was 160.3%/71.3%/0.23, up 6.70pct, 1.28pct, and 0.04 respectively compared to 2024H1.

The company's debt structure is generally stable, the debt level has risen slightly, and the level of cash protection has improved. In the context of an industry with fluctuating real estate cycles, the company's financial situation is stable, and it has the ability to operate continuously under three-wheel drive in leasing, trading, and real estate sales.

Profit forecasting and investment advice

The company's business quality was steady in Q1-Q3 in 2024. Along with the steady operation of the company's leasing and trading business and the entry and carry-over of real estate development reserve projects, we maintained the prior profit forecast. We expect the company's 24-26 revenue growth rate to be 6%/0%/19%, 10%/-9%/54%, and EPS of 0.9 yuan, 0.82 yuan, and 1.26 yuan. Using the comparable company valuation method, the median PE multiple for comparable companies in 2024 was 12.7 times. We believe that the company's leasing and trading business is operating steadily, and that reserve projects in the real estate sales sector are ready to go. Compared with comparable companies, the plan to increase shareholders' confidence shows shareholders' confidence. Therefore, it maintains the company's PE 13 times in 24 years, corresponding to a target price of 11.69 yuan, and maintains a “buy” rating.

Risk warning: Property rental occupancy rates fall short of expectations; the pace of completion of real estate development projects falls short of expectations; residents' willingness to buy homes falls short of expectations; international trade frictions intensify