Net revenue and profit increased steadily, and an interim dividend was paid for the first time. As of June 30, 2023, the company achieved operating income of 1,512 million yuan, +38.7% year-on-year; net profit of 248 million yuan, +17.5% year-on-year; gross margin and net profit margin were 28.1% and 16.4% respectively, which remained at a high level overall. The board of directors recommended declaring an interim dividend of RMB 0.081 per share, with a dividend payout ratio of 50%.
Looking at business segments, in the first half of 2023, the company's non-commercial property management and value-added services contributed 1,211 billion yuan, +49.4%, accounting for 80.1% of total revenue; we believe that the sharp increase in non-commercial property revenue was mainly due to 1) an increase in management area; 2) value-added services for non-owners were accompanied by stable fluctuations in the Chinese real estate market cycle, increased service demand from cooperative real estate developers, and the launch of intelligent services in the second half of 2022.
Market expansion is progressing steadily, and the scale of management continues to increase. As of June 30, 2023, the company had 416 contract projects, with a total contract area of 77.49 million square meters, an increase of 9.8% over the end of '22; 346 projects under management, with a total management area of 58.76 million square meters, an increase of 13.7% over the end of '22. In addition to stable delivery by the controlling shareholder Yuexiu Real Estate, the company is also actively expanding the property management needs within the Yuexiu Group system, and at the same time steadily promoting market expansion. In the first half of 2023, Yuexiu Service signed 44 new projects, adding 8.26 million square meters of contract area, an increase of 64.9% over 5.01 million square meters in the same period in '22.
Financial stability and cash abundance, cash management efficiency improved. As of June 30, 2023, the company's cash on hand was 4.620 billion yuan, net operating cash inflow was 293 million yuan, and interest income was 52 million yuan, +64.8% year-on-year.
Driven by the five major platforms, value-added services continue to improve. The company has now built five major value-added service platforms: brokerage, new retail, Meiju, community commerce, and intelligent commerce, to achieve multi-platform co-driving. In the first half of 2023, the new retail platform continued to optimize products, implement innovative businesses, and greatly increase the average household output value; the Mercure platform further optimized product power, enhanced service capacity, and increased market power. As of June 30, 2023, the company's community value-added service revenue increased by 64.2% from 244 million yuan in the same period in '22 to 401 million yuan. Among them, revenue from the new retail business increased 1.5 times over the previous year to 153 million yuan, and the revenue from the Mercure business increased 61.4% year on year to 80 million yuan.
Investment advice. Considering that the company has sufficient cash on hand and no bank loans, the contract area and amount have maintained a good growth trend, and has now promoted the equity incentive plan and successfully built a modern enterprise system. We gave the company an EPS of 0.35 yuan in 2023, 10-12 times PE valuation. The corresponding market capitalization range was HK$5.8-6.9 billion, and the corresponding reasonable value range was HK$3.80-4.56 per share. (This article is not specified; all prices are in RMB, 1 HKD = 0.92 RMB). Risk warning: 1) There is a risk that the total growth rate of new housing in the real estate industry will shrink; 2) Market recovery falls short of expectations.
Risk warning: 1) There is a risk that the growth rate of the total number of new homes in the real estate industry will shrink; 2) Market recovery falls short of expectations.