The company's performance in 2023 was in line with expectations, revenue reached a new high, and the growth rate of net profit to mother changed from negative to positive, maintaining an increase in holdings rating. In 2023, the company's revenue was 131.4 billion yuan (RMB, same below), and net profit to mother was 3.1 billion yuan, up 3.3% and 13.1% year-on-year respectively. Considering that the real estate development sector is in an adjustment period, and property sales are the company's main business, the company's EPS was adjusted to 1.35 yuan and 1.53 yuan (originally 1.52 yuan, 1.90 yuan) from 2024 to 2025, and the company's EPS was added to 1.76 yuan in 2026, maintaining an increase in holdings rating.
The company's gross margin fell to 13% due to market pressure and the adjustment of the Canadian strategy. Expectations bottomed out. In 2023, the company's gross margin fell 4.3 pct to 13% year on year, and net profit increased 0.4 pct to 2.4% year over year. The decline in gross margin was mainly due to the year-on-year decline of 4.7 pct to 11.3% in the property sales segment. There are two reasons: ① Affected by the industry and price limits, the average settlement price fell 2.7% year on year; ② land acquisition was concentrated in core Tier 1 and 2 cities, and the gross margin of related projects was low. Considering that a large number of policies currently support market stabilization, the company's land acquisition structure is stabilizing, and hotels and investment properties are improving steadily, the company's profit margin expectations have bottomed out. In addition, the company accrued impairment losses of 1.4 billion yuan in non-financial assets in 2023, which is slightly lower than the 2022 accrual scale (1.5 billion yuan).
The company's land acquisition investment strategy is effective, and the carry-over resources are sufficient, and the guarantee of subsequent performance is strong. In 2023, the company's land acquisition investment continued to focus on convergence. Xintuo projects accounted for 84% of the value of first-tier and second-tier goods, and 74% of equity. Judging from sales feedback, the removal rate for the first launch in 2023 increased by 7pct to 82% year-on-year. It can be seen that the land acquisition strategy gave full play to the company's advantages. In addition, by the end of 2023, the saleable value of the company's own projects was about 245 billion yuan, of which 80% of the value of Tier 1 and 2 goods were sold, and the uncarried forward amount was about 256.5 billion yuan. The scale is large, providing a guarantee for the next 2 to 3 years of performance.
The company's finances are sound, financing is progressing smoothly, and the 2024 debt structure is expected to be secure. In 2023, the company's financing channels were smooth, the weighted average interest cost decreased by 10pct to 4.3% year on year, and overseas financing was replaced by 1.2 billion US dollars; by the end of 2023, the company's debts due within one year accounted for 22% of the total debt, a low ratio. At the same time, the company will complete the replacement of all foreign debts due throughout the year in the first half of 2024.
Risk warning: The recovery in market demand fell short of expectations.