The leading position in the contract construction industry is stable and maintains a “buy” rating
Greentown Management Holdings announced its 2023 results. Revenue and profit continued to grow, and the area of contracts and newly signed projects was steadily expanding. As a leader in the contract construction industry, it maintained more than 20% of the contract construction market for eight consecutive years. With the acceleration of guaranteed housing construction, the increase in the proportion of land acquisition in urban investment, and relief of housing companies' demand to secure buildings, we believe that the company will develop steadily in competition. We will raise 2024-2025 and add a profit forecast for 2026. We expect the company's net profit to mother will be 12.78 billion yuan, 16.25 billion yuan, and 2,013 billion yuan respectively (the original value for 2024-2025 is 11.36 billion yuan and 1,325 billion yuan). The corresponding EPS is 0.64, 0.81, and 1.00 yuan, respectively. It was 8.1, 6.4, and 5.2 times, respectively, maintaining a “buy” rating.
Steady growth in revenue and profit, maintaining full dividend payments
In 2023, the company achieved continuous operating revenue of 3.302 billion yuan, an increase of 24.3% over the previous year. By business segment, commercial construction, government construction, and other business revenues were 2.35, 7.9 billion yuan, and 170 million yuan respectively. Among them, the commercial contract construction business increased by 40.5% year-on-year, due to the company's continuous promotion of the strategy of deep territorial cultivation. The scale of innovation grew steadily, and revenue was still dominated by commercial proxy construction. In 2023, the company achieved net profit of 974 million yuan, a year-on-year increase of 30.8%, operating cash flow of 955 million yuan, and no bank liabilities; gross margin and net margin were 52.2% and 29.7% (52.3% and 27.7% in 2022), respectively. By business sector, the gross margins of commercial construction and government agency construction were 52.3% and 45.2% respectively, down 1.5 and 4.4 percentage points respectively. The company's basic earnings per share are 0.5 yuan/share. It is proposed to pay a final dividend of 0.4 yuan per share and a special dividend of 0.1 yuan per share to maintain full dividends.
Xintuo's area continues to grow, and the value structure is relatively high
The company continues to expand projects in major economic regions. As of the end of 2023, the total construction area of contract projects was 119.6 million square meters, an increase of 17.9% over the previous year, of which the government, state-owned enterprises and financial institutions accounted for 68.3%; the estimated total value value of contract projects was 892.5 billion yuan, of which the five major economic regions accounted for 77.7%, and the overall value structure was relatively high.
In 2023, the company's Xintuo contract area was 35.3 million square meters, an increase of 25.0% over the previous year, of which the government, state-owned enterprises and financial institutions accounted for 74.7% of the business; the estimated construction cost for the Xintuo project was 10.37 billion yuan, corresponding to an average contract price of 294 yuan/square meter, and the average contract price remained relatively stable.
Risk warning: The development of the real estate industry falls short of expectations, industry competition intensifies, and project expansion falls short of expectations.