Everbright Securities released a research report stating that maintaining the “buy” rating of CNOOC Properties (02669), considering expanding the increase in non-residential projects and restructuring the basic property management business, the gross margin of value-added household services declined, adjusted the 2024-2025 net profit forecast to 16.3/1.88 billion yuan, and added the 2026 forecast to 2.09 billion yuan, corresponding to the 2024-2026 EPS of 0.50/0.57/0.64 yuan. The valuation is attractive. The company's own brand strength is strong, its outreach competitiveness is constantly improving, and the amount of new contracts is growing rapidly. At the same time, related parties operate steadily and continue to deliver high-quality residential property management projects, and there is a strong guarantee for future performance growth.
Event: The company achieved operating income of 13.05 billion yuan in 2023, +19.7% year over year (2022 financial data was adjusted retroactively); gross profit of 2.07 billion yuan, up 19.3% year on year; realized net profit to mother of 1.34 billion yuan, up 22.8% year on year; final dividend of HK 8.5 cents per share (HK 8.0 cents in 2022).
The report's main points are as follows:
1) Outreach is active, and the amount of new orders is growing rapidly.
With its brand advantage and good service reputation, the company actively made efforts to expand the market and expand its business scale. By the end of 2023, the company's management area was about 400 million square meters (third party accounting for 40.5%, up 7.7pct from the previous year), adding 81.2 million square meters of management area during the year, with a contract amount of about 7 billion yuan (compared to 5.2 billion yuan last year). Of these, 70.6% of the new projects came from independent third parties, and the corresponding contract amount reached 4 billion yuan; judging from the composition, 70% of the company's managed area was residential, 5% was commercial and office buildings, 25% were public construction and others The share of real estate and non-residential properties has increased.
2) Revenue from value-added services has increased dramatically, and basic property management is still the main profit contributor.
In 2023, the company's basic property management/household value-added revenue was 94/1.3/2.1 billion yuan respectively, up 16%/71%/17% year over year; gross profit growth rates were +29.6%/+16.1%/-5.8%, respectively, accounting for 68.0%/16.3%/13.5% of gross profit. By increasing subcontracting efforts and optimizing the human resources structure, the company's gross margin of basic property management increased by 1.6 pct to 15.0% year on year; in value-added services, owners' consumer demand for home improvement, retail, community group purchases, and home delivery services increased significantly; in terms of value-added value for non-residents, the company undertook a large number of equipment system installation, maintenance and special engineering services through its Haibo Engineering brand, which led to a year-on-year increase of 48.3% to 1.2 billion yuan in the sector's revenue.
3) Optimize the personnel structure and improve per capita efficiency and operational efficiency.
In 2023, the company achieved significant results in optimizing the human resources structure and improving per capita efficiency, generating annual per capita income of 300,000 yuan and per capita profit of 31,000 yuan, with a per capita management area of 9335 square meters, a significant increase compared to 2022; the company's administrative and marketing expenses ratio was 3%, -0.7 pct; in the case of comprehensive consideration of future business development (such as seizing potential joint ventures or mergers and acquisitions opportunities, digital transformation and smart property investment, new business development, etc.), the company maintained sufficient cash on its books. The 2023 dividend payment amount was about 420 million yuan, and the dividend ratio was 31 million yuan %, same as 2022.
Risk warning: Increased competition for external development has led to a decline in gross margin, and the development of value-added services falls short of expectations.