24Q1 revenue was +20% year over year, and net profit to mother was -17% year over year, in line with expectations. According to the company's announcement, with 2024Q1, the company achieved operating income of 870 million yuan, +19.5% year on year; net profit to mother of 39 million yuan, -16.9% year on year, in line with expectations; net profit without deduction of 38 million yuan, or -15.7% year on year. 2024Q1, the company's gross margin and net profit margin were 12.2% and 4.5%, respectively; basic earnings per share were 0.17 yuan, -19.1% year over year; the three expense ratios (financial expense ratio, sales expense ratio, management expense ratio) were 6.3%, -1.1 pct year on year; weighted return on net assets was 3.25%, -1.36 pct year on year; the decline in company performance was mainly due to: 1) Some customer budgets were reduced, while some regions implemented the lowest price bidding policy, and Xintuo and inventory projects renewed prices The decline; 2) aviation property customers, the company's key customers, continued to reduce expenses, causing aviation business operations to continue to show losses; 3) the rigidity of labor costs increased; 4) the company implemented the city partner program since 2022. As the city's business grew and profits were presented, minority shareholders' equity increased significantly compared to the same period of the previous year; 5) credit impairment losses increased compared to the same period of the previous year.
The amount of the new expansion project in 23 years was 1.88 billion, and the annualized contract amount was 970 million. According to the company's announcement, in 2023, the total bid amount for the company's new expansion projects was about 1.88 billion yuan, -1.6% year-on-year, and the revenue amount of saturated annualized contracts was 970 million yuan, -4.1% year-on-year.
By the end of 2023, the company had a service area of 170 million square meters and 594 projects under management, +15.8% over the same period last year. The company focuses on key central city companies to implement expansion plans and continues to promote a nationwide business layout. By the end of 2023, the company's share of projects outside of Chongqing had increased to 65.8%, +5.6 pct compared to the previous year.
Business formats such as office, aviation, and public services have maintained steady growth, and strategic project expansion continues to increase. According to the company's announcement, in 2023, by business type, office property, public property, school property, commercial and residential property, and aviation property accounted for 41%, 25%, 14%, 11%, and 9% respectively, compared with +20%, +40%, +16%, +4%, and +7%, respectively. By product, revenue from basic properties, innovative businesses, and urban services accounted for 88%, 4%, and 8%, respectively, compared with +14%, +14%, and +184%, respectively. Looking at the subregions, Chongqing and regions outside Chongqing accounted for 35% and 65% of revenue respectively, +5% and +30%, respectively. The company's nationwide layout continues to advance.
Investment analysis: Revenue is growing steadily, performance is still under pressure, and the “gain” rating is maintained. As an independent third-party property management company, Shindaisho strategically focuses on high-quality tracks for non-residential property management, and has long-term management experience and service reputation in the fields of schools, public sector, aviation, etc. The company actively recruits many outstanding management talents and establishes a multi-level incentive mechanism, which is expected to accelerate the growth of the company's size. We maintain the company's net profit forecast for 2024-26 at 176 million yuan, 196 million yuan, and 210 million yuan. Currently, the company's PE in 24 was 12 times, maintaining the “increase in holdings” rating.
Risk warning: Business development falls short of expectations, mergers and acquisitions fall short of expectations, risk of falling profit margins due to rapid rise in labor costs, and the exchange has issued a letter of concern regarding the company's restrictive stock incentives. Currently, the company has not responded.