Event: The company announced its 2023 results. Revenue for the full year of 2023 was 5.42 billion yuan, up 4.7% year on year; net profit to mother was 450 million yuan, up 5.1% year on year.
Core business revenue grew steadily, and gross margin increased steadily. The company's core business grew steadily: in 2023, revenue from property management services of 3.56 billion yuan increased 17.5% year on year; revenue from community value-added services of 1.31 billion yuan increased 2.3% year on year; revenue from developers' value-added services was 550 million yuan, down 36.2% year on year. In terms of profit: The company's gross margin for the full year of 2023 was 26.5%, up 0.7 pct year on year; among them, the gross margin of property management decreased by 0.5 pct to 24.0% year on year, the gross margin of community value-added increased sharply by 3.5 pct to 35.7% year on year, and the profitability of the core business increased steadily. In terms of cost control:
The company's adjusted marketing management rate in 2023 (not including the impact of customer relationships and impairment loss of goodwill) decreased by 0.5 pct to 10.5% year over year. The company's advance collection of property fees has increased, and cash flow has returned to steady: operating cash flow of 420 million yuan for the full year of 2023, and the company's contract debt of 830 million yuan as of the end of 2023, an increase of 10.5% over the previous year.
The scale of property management has been growing steadily, and hospitals are not staying on the track. By the end of 2023, the company had 224 million square meters of management area, an increase of 12.8% over the previous year; of these, third-party projects accounted for 48.9% of the area, and third-party projects accounted for 43.2% of revenue. By business type, by the end of 2023, the non-residential management area reached 50.37 million square meters, accounting for 22.5% of the total managed area. The company is deeply involved in the hospital circuit. Currently, it is serving 43 hospital projects, with an annual contract amount of about 200 million yuan for hospital logistics, and collaborating on 11 group meals for hospital projects.
Community value-added businesses, such as group meals, are developing rapidly, and the degree of real estate correlation is continuously decreasing. The company has steadfastly implemented the “big logistics” strategy, sought differentiated competition in value-added business, and reduced dependence on real estate. The results have already been shown. The company's revenue from community value-added services increased 2.3% year-on-year in 2023, with revenue from various non-cyclical services growing rapidly. As an important business in the company's logistics strategy, the group meal business achieved revenue of 450 million yuan in 2023, an increase of 26.4% over the previous year; fixed resource management services achieved revenue of 160 million yuan in 2023, an increase of 44.7% over the previous year. Revenue from one-time services such as bag occupancy and asset management, which are highly linked to real estate in value-added community services, fell 25.2% year-on-year in 2023.
Divestment investments that fall short of expectations in a timely manner and increase dividend rates. In January 2024, the company signed an equity transfer agreement with the original shareholders of Shanghai Xiangxi to sell back 70% of the shares of Shanghai Xiangxi acquired in 2023 to the original shareholders. The company paid 0.205 yuan per share in 2023, and the dividend rate reached 40%, an increase of 7 pcts year-on-year.
Profit prediction and investment rating: The company's gross margin remains stable, community value-added businesses such as group meals are developing rapidly, and differentiated competitive advantages are gradually being accumulated. According to the company's latest annual report, we lowered its 2024-2025 net profit forecast to 49/540 million yuan (original value was 68/770 million yuan), and the estimated net profit for 2026 is 590 million yuan. The corresponding EPS is 0.57/0.62/0.68 yuan, and the corresponding PE is 3.6X/3.3X/3.0X, maintaining a “buy” rating.
Risk warning: The scale of projects delivered by major shareholders/related parties falls short of expectations; market-based expansion falls short of expectations; total social demand recovery is slow.