Tianfeng Securities released a research report stating that it maintained the “buy” rating of Poly Industries (06049) and adjusted the company's net profit to mother for 24-25 to be 1,636 billion yuan and 1,933 billion yuan (previous value of 1,786 billion yuan and 2,070 billion yuan) in consideration of increased competition in the industry. The company is backed by Poly Group, a leading central enterprise. It has strong shareholder advantages and strong endogenous growth momentum. At the same time, external expansion is active, and both scale and profit are growing steadily. The bank is expected to achieve its future performance goals steadily under the management's focus on lean management strategies.
Incident: The company announced its 2023 results. The company achieved operating income of 15.062 billion yuan, +10.0% year on year; realized net profit to mother of 1,380 million yuan, +24.0% year on year; achieved basic earnings per share of 2.50 yuan/share, +24.4% year over year.
The main views of Everbright Securities are as follows:
Performance growth was steady, and gross margin bucked the trend
On the revenue side, the company achieved operating revenue of 15.062 billion yuan in 23, an increase of 10.0% over the previous year. Among them, revenue from property management, non-owner value added, and community value-added services was 101.52, 20.93, and 2,816 billion yuan, respectively, +20.5%, -4.6%, and -8.1%, respectively. On the profit side, the company achieved net profit of 1,380 million yuan in 23, an increase of 24.0% over the previous year. The expansion of management scale supports rapid growth in performance. In '23, the company achieved operating cash flow of 2.42 billion yuan, +63.9% year-on-year, covering a net profit ratio of 1.73, and high profit quality. The company's overall gross profit margin in '23 was 19.61%, up 0.8 pct from '22, and the average profit level by business increased. The company's net profit margin in '23 was 9.27%, up 0.99pct from '22. In terms of cost control, the company's management rate in '23 was reduced by 0.68pct to 8.14% compared to '22, and lean management drove an increase in profit margin. The company's dividend ratio increased by 15 pct to 40% in '23, continuing to strengthen shareholder returns.
The scale advantage continues to expand, and market-based development has achieved remarkable results
By the end of '23, the company's contract and management area were 922 million square meters and 720 million square meters respectively, +19.5% and +24.9%, respectively, and the contract management ratio reached 1.28 times. In 2023, Poly Development, the majority shareholder, achieved a contract area of 23.86 million square meters. Benefiting from Poly's resource support, the company's potential delivery increase is sufficient. Looking at the project source, by the end of '23, the contract area from Poly Development and a third party accounted for 37.1% and 62.9% of the total contract area, respectively. The third party's share increased by 3.5 pct compared to the same period in '22. Within 23 years, the company's annual contract amount for new third-party projects was 2.97 billion yuan, +7.4% year-on-year. The single-year contract amount for newly contracted third-party projects was about 2.77 billion yuan, +61.0% year-on-year, and market-based development continued to break through. Looking at the distribution of business formats, as of the end of 23, the company's residential communities and non-residential properties were under management area of 2.9 million square meters and 430 million square meters respectively, accounting for 40.2% and 59.8% respectively. Residential projects have expanded their stock in 23 years and the contract amount in a single year has exceeded 100 million yuan, and they are all located in core cities such as Beijing, Nanjing, Wuhan, and Chengdu. The business layout is being concentrated in core cities at an accelerated pace. The share of non-residential management area increased by 3.7 pcts compared to the same period in '22. Among them, commercial and office buildings, public and other property management areas each accounted for 4.1% and 55.7% of the total managed area, while the share of public and other properties increased by 3.2 pcts compared to '22. In '23, the company signed new contracts worth 1,506 billion yuan for public and other property projects in a single year, +36.7% over the same period, expanding the unique expansion advantages of the global business format. Looking at the unit price of property management, as of 23, the company's residential community property management unit price was 2.31 yuan/square meter/month, an increase of 0.03 yuan/square meter/month over the same period in '22. The unit prices for residential property management from Poly Development and third parties were 2.41 and 1.82 yuan/square meter/month respectively. Benefiting from the increase in pricing standards for new projects and price increases for some projects under management, the average unit price of property fees increased steadily.
The scale of community value-added has declined, and the optimized structure focuses on the core
In terms of community value-added services, revenue of 2,816 billion yuan was achieved in '23, accounting for about 18.7% of revenue, or -8.1% year-on-year. It was mainly due to contraction and fluctuations in some lifestyle service businesses, affected by the market environment where consumption was weak and competition intensified, and the company continued to optimize its product structure and strengthen its focus on core products. In terms of value-added services for non-landlords, revenue of 2,093 billion yuan was achieved in '23, accounting for about 13.9% of revenue, or -4.62% year-on-year, mainly due to a decrease in the number of projects providing co-marketing services and a slight decline in office leasing business revenue due to market fluctuations. Against the backdrop of the contraction of the upstream real estate business, the revenue scale of the company's non-owners has remained at a relatively stable level.
Risk warning: business development falls short of expectations, uncertainty in business operation, uncertainty in policy regulation