Business revenue has been growing steadily, and the dividend ratio has greatly exceeded expectations. The company is a comprehensive high-end business service enterprise. The International Trade Center is located in the core area of Beijing's CBD, with high assets and steady operation. In 2023, China International Trade achieved revenue of 3.95 billion yuan, up 14.9% year on year; gross margin increased 1.5pp to 58.0% year on year; net profit to mother increased by 12.8% year on year, with a CAGR of 10.2% in 2018-2023; plans to distribute cash dividends of 13 yuan (tax included) to all shareholders for every 10 shares, accounting for 64% and 40% of the total cash dividend, respectively. In 2023, the company's property leasing and management sector achieved revenue of 3.38 billion yuan, a year-on-year increase of 6.8%, with a gross profit margin of 66.4%; of these, office buildings grew 1.4% to 1.56 billion, and shopping malls grew 10.0% to 1.28 billion yuan, and apartments grew 15.5% to 1.83 billion yuan. The company's hotel business segment achieved revenue of 570 million yuan, an increase of 107.4% over the previous year.
Property rents and occupancy rates are generally stable, and resilient to cycles. The Guomao office business performed well. Rental revenue in 2023 increased 1.4% year on year, and the occupancy rate was basically the same as before the pandemic. The average rent for office buildings in 2023 increased 1.8% year on year to 638 yuan/square meter/month, and the occupancy rate dropped slightly by 0.4 pp to 95.9%. The mall's occupancy rate remained high, and the average rent rebounded. The average rent in the mall increased by 10.4% to 1,279 yuan/square meter/month, and the rental rate dropped slightly by 0.6pp to 98.2%. After the upgrade, the rental rate of Guomao apartments increased rapidly, and revenue increased dramatically. The average rent of apartments dropped 1.6% to 370 yuan/square meter/month, and the occupancy rate increased by 12.6pp to 85.9%.
The hotel business saw a year-on-year increase in revenue of 107.4% with the resumption of business travel activities, and gross margin quickly rebounded to 8.1%, exceeding pre-pandemic levels. Overall performance is improving, and cyclical resilience is strong.
Cost control is effective, and the financial situation is stable. The company's expense ratio has been continuously optimized. The total sales, management and financial expenses ratio in 2018-2023 was reduced from 10.0% to 6.3%, and gross margin and net margin increased from 51.6% and 24.5% to 58.0% and 31.9%, respectively. Cash flow is sufficient. Net operating cash flow increased 5.2% year on year to 1.92 billion yuan in 2023, and the company's long-term loans fell 31% year on year to 1.14 billion yuan. Since 2018, the balance ratio has shown a downward trend. The balance ratio fell to 24.7% at the end of the year; the cash flow interest guarantee ratio continued to increase from 9.5 to 27.0, and the company's financial situation continued to improve. The average financing cost of the company fell from 4.8% to 3.6% in 2018-2023, and the company's central enterprise advantage was obvious.
Profit forecast and investment advice: The compound growth rate of net profit due to mother is expected to be 7.6% in the next three years. Considering the company's superior asset location and scarcity, and continued improvement in operations, coverage is given a “holding” rating for the first time.
Risk warning: Risks such as slowing economic growth, falling short of expectations for property leasing, and increased supply of office buildings.