Incident: Nandu Property announced its 2024 interim results. In the first half of '24, the company achieved revenue of 0.89 billion yuan and added a contract area of 7.9213 million square meters (yoy +34.2%).

Insist on reducing costs and increasing efficiency, and enhance cost control capabilities. In the first half of the year, the company achieved operating income of 0.89 billion yuan (yoy -4.45%), net profit to mother of 0.02 billion yuan (yoy -77.78%), and net profit to mother declined year-on-year, mainly due to the decline in the company's investment in Anbang Guarding's stock price, which confirmed changes in fair value. The company's sales expenses in the first half of the year were 11.245 million yuan, management expenses were 54.8 million yuan, and financial expenses were 2.321 million yuan. Among them, sales expenses and management expenses decreased by 5.30% and 9.55%, respectively, compared with the same period of the previous year. The main reason was that the company continued to reduce costs and increase efficiency, optimize expenses, and continue to improve its ability to control expenses.

The area of new contracts increased year-on-year, and market expansion efforts increased. The company signed 56 new projects in the first half of the year, with a new contract area of 7.9213 million square meters, an increase of 34.2% over the same period last year. As of June 2024, the company has signed a total of 685 projects, with a total contract area of 85.994 million square meters. The company focuses on the Yangtze River Delta region, which accounts for 88.3%, which is basically the same as at the end of 2023. In an environment where the overall property industry market size is expanding but the growth rate is slowing down, the company is increasing its market expansion efforts, which shows the company's confidence in the market.

Integrate internal and external resources to explore business opportunities on multiple tracks. In the first half of the year, in the value-added property service sector, the company's value-added services covered more than 100 parks, with a total contract amount exceeding 10 million yuan; the community value-added service sector, with cumulative revenue exceeding one million yuan; the asset management service sector, which managed 598 apartments, with a occupancy rate of 82%; and the industrial operation sector signed a contract for the Yunjian Information Industrial Park project. The company relies on its original experience, integrates external cooperation resources, and works on multiple tracks to seek broader development space and diversified business opportunities.

Profit forecasting and valuation. The company's increased market expansion efforts show the company's confidence in the market, and the external development project provides the foundation for the company's subsequent profits. We expect the company to achieve operating income of 1.881, 1.975, and 2.09 billion yuan in 2024-2026; net profit to mother of 0.135, 0.164, and 0.187 billion yuan, respectively. The corresponding PE is 9.62x, 7.90x, and 6.95x, respectively, maintaining the “recommended” rating.

Risk warning: industry competition intensifies; rate control is not effective; business development is slowing down