Currently, the valuation of mainstream property companies is still at a historically low level. The superposition dividend ratio has increased, the dividend ratio is becoming more attractive, and the allocation value is gradually becoming prominent.
The Zhitong Finance App learned that Ping An Securities released a research report saying that the scale growth of mainstream real estate companies narrowed in 2023, but the quality improvement was obvious. Considering the broad scope of the industry in the future, regional and project focus, and technological empowerment measures will help reduce costs and increase efficiency, and the operation and performance of mainstream real estate companies is expected to remain stable. The bank believes that the current valuation of mainstream property companies is still at a historically low level. The superimposed dividend ratio has increased, the dividend ratio is becoming more attractive, and the allocation value is gradually becoming prominent. It is recommended to focus on Poly Industries (06049), Xingsheng Commercial (06668), investment balance (001914.SZ), and Xincheng Yue Service (01755).
Ping An Securities's views are as follows:
Steady growth in performance and improvement in profitability:
The overall revenue of the 12 mainstream real estate companies increased 16.4% year on year in 2023, and the growth rate was 11 percentage points narrower than in 2022; thanks to the recovery in gross margin and the improvement in sales and management expenses, the overall net profit to mother increased 26.4% year on year, up 16.4 percentage points from 2022. Among them, the gross margin of other businesses represented by commercial operation services continued to rise, gross margins of basic property management services and community value-added services improved slightly, and value-added services for non-owners continued to decline; the overall improvement in profitability mainly stemmed from improving human efficiency through regional and project focus, technological empowerment, and active elimination of low-quality projects. The revenue growth rate of central state-owned enterprises and private enterprise property management companies is basically the same. The net profit growth rate of private enterprises rebounded markedly, but there is still a gap between the absolute growth rate (11.5%) and central state-owned enterprises (29.5%).
Various businesses are showing differentiation, and the weight of basic property management is heavier:
The overall management area of the 10 mainstream property companies rose to 2.72 billion square meters in 2023, an increase of 20.9% over the previous year. The growth rate fell 8.5 percentage points from 2022. More attention was paid to project quality and continued to expand effectively. The share of third parties and non-residential households in the management area continues to rise, and the dependence on related housing enterprises has declined further. Non-residential buildings are an important source of incremental contributions to market expansion, involving various types of offices, businesses, schools, hospitals, etc. Expansion methods include direct bidding, “total to total” major customers, and joint ventures with platform companies. Community value-added has entered a new stage of vertical industrial capacity building for core products, and gross profit contribution per unit area has rebounded. The scale of commercial management has been expanded and operations have improved, and the requirements for in-depth operation have deepened.
Optimize cash flow performance and increase dividend ratio:
In 2023, the overall accounts receivable and notes of the 12 mainstream real estate companies increased 15.2% year on year, lower than revenue (16.4%), and the growth rate was relatively manageable; net operating cash flow recovered markedly for the whole year, and the overall cash in hand at the end of the year was 64.11 billion yuan, an increase of 10% year on year. The overall dividend ratio of 12 mainstream real estate companies rose to 50.6% in 2023, up 15.3 percentage points from 2022. Along with the increase in the scale of dividends, the average dividend rate exceeded 5%, and dividend attractiveness continued to increase. Among them, the growth rate of accounts receivable from central state-owned enterprise property management companies is more manageable, and property fee collection and cash return are healthier; private enterprise property management companies have a higher dividend ratio, but the marginal increase in the dividend ratio of central state-owned enterprises is more obvious.
Risk warning: 1) Real estate restoration falls short of expectations; 2) competition in the property management industry increases risk; 3) risk that property management fees are more difficult to collect and cash return falls short of expectations; 4) There is a risk that the dividend ratio of some enterprises will be low for a long time.