Seazen Holdings (601155.SH) has consolidated the safety base, and the advantages of "two-wheel drive" are highlighted

Although the entire real estate industry is still at the bottom of the cycle, the positive signals released by the policy have already appeared, and the market sentiment is about to heat up. From the current point of view, the real estate industry has experienced the darkest moment in the past, and there is still no shortage of high-quality real estate companies, withstanding the pressure, relying on a unique business model and good management, maintaining resilient growth.

Recently, Seazen Holdings (601155.SH) handed over its 2023 performance report. According to the data, in 2023, the company will achieve revenue of 119.17 billion yuan, a year-on-year increase of 3.22%, and a net profit attributable to the parent company of 740 million yuan.

1· Solid financial fundamentals, continue to consolidate the strategic advantage of two-wheel drive

Judging from the annual report card handed over by Seazen Holdings, there are two core highlights worthy of attention.

First, the company's financial fundamentals showed a stable trend, and the operational security continued to be consolidated.

On the one hand, Seazen Holdings' cash flow management performance is excellent, providing solid support for the company's steady operation.

From an operational point of view, in the past year, Seazen Holdings has maintained a high collection rate while maintaining decentralization. In 2023, the amount of payment will be 81.2 billion yuan, with a collection rate of 107%, ranking among the top in the industry. The good performance of sales collection has effectively guaranteed the company's liquidity and operational stability.

At the same time, the company has abundant cash on hand, with a cash balance of 19 billion yuan as of the end of 2023. The company's net operating cash flow reached 10.2 billion yuan, and the operating cash flow has been positive for six consecutive years.

On the other hand, the company continued to make financing breakthroughs, the scale of interest-bearing liabilities remained low, the debt structure was continuously optimized, and the financing cost was effectively reduced.

In the past year, the company has actively repaid its debts to ensure that every debt is repaid ahead of schedule or when due. A total of RMB10.745 billion of domestic and foreign open market bonds were repaid as scheduled. The scale of debt has decreased, and the debt structure has continued to be optimized. As of the end of 2023, the company's interest-bearing liabilities decreased by RMB14.2 billion year-on-year to RMB57.1 billion, and the interest-bearing liabilities of joint ventures decreased to RMB5.208 billion.

The company continued to maintain smooth financing and successfully issued a number of bonds during the year, which effectively reduced financial costs and enhanced financial security. Over the past year, the company's average cost of financing was 6.2%, down 32 basis points from the end of 2022.

It is worth mentioning that the company's credit status of major banks and other financial institutions has maintained a good reputation, providing it with strong financial support and flexible operation space. As of the end of 2023, Seazen Holdings has received a total of 109 billion yuan of group credit from major banks, of which 28.1 billion yuan has been used, and there are still sufficient unused credit lines available.

Second, the strategic advantages of two-wheel drive continued to be highlighted, and the contribution of business management performance was further improved.

Seazen Holdings has always adhered to the two-wheel drive operation mode of "residential + commercial", and the company has achieved remarkable results while consolidating the basic development business and continuing to focus on business management.

In 2023, Seazen Holdings will achieve a total revenue of 11.324 billion yuan from commercial operations, a year-on-year increase of 13.17%, further increasing its contribution to performance.

In the past year, the company has opened 22 new Wuyue Plazas, ranking among the top in the industry. By the end of 23, the company had opened 161 Wuyue Plazas, with an average occupancy rate of 96.48%. As of the end of the period, the company has laid out 198 Wuyue Plazas across the country.

Whether it is from the results of the opened projects or the results of entrusted management, it can be seen that the company has strong investment promotion and operation capabilities and business management output capabilities in the field of business management. Based on this, the commercial segment continued to contribute to the company's profit increment, brought stable cash flow to the company, and continuously helped the company through the cycle.

2· Examine the four major aspects of the revaluation of Seazen Holdings

Standing at the moment to discuss the value opportunities of Seazen Holdings, the following four key aspects are worth in-depth discussion.

a· Industry repair expectations

In the current adjustment period of the real estate industry, there is a certain uncertainty in the market about the future direction of the industry. However, there are some signs that the property sector is on track for an upturn.

With the gradual increase in policy support, the healthy and stable development of the industry around both ends of supply and demand, at the same time, the economic environment is gradually improving, and the valuation of the real estate sector has bottomed out, which will support the industry to move towards a new inflection point.

Previously, the Zheshang Securities Research Report pointed out that the current downside of the real estate sector is limited, and the "low valuation + expectation difference" will continue to promote the valuation repair of the real estate sector in 2024.

b· The company's stable operating strength has been continuously verified

From the company's performance in the trough stage of the industry, it is not difficult to see that Seazen Holdings has demonstrated sustained and stable operating strength, and has the characteristics of going through the industry and market cycles.

Based on this ability, it will not only help to enhance the confidence of market investors in the company, but also strengthen its safety foundation and industry leading edge as the industry's predicament improves. With solid fundamentals and strong core competitiveness, Seazen Holdings is expected to continue to stand out in the new industry development cycle.

c· Short-term performance and long-term growth are interesting

From the perspective of real estate development business, Seazen Holdings has shown good growth potential in both the short and long term.

As of the end of 2023, Seazen Holdings has a saleable land reserve of 38.84 million square meters, of which 40% is in first- and second-tier cities and 21% is in third- and fourth-tier cities in the Yangtze River Delta. This large land bank provides strong support for the company's sustainable development in the future.

On the other hand, the company has abundant resources to be carried forward. In the past 2023, Seazen Holdings achieved a contracted sales amount of 75.983 billion yuan and a contracted sales area of 9.6878 million square meters. As of the end of 2023, the company has sold an uncarried area of 21,701,200 square meters (including joint venture projects), and sufficient outstanding resources provide a solid guarantee for the performance in the new year.

From the perspective of business management and operation, after 15 years of deep experience, the company's commercial sector has continued to grow, becoming the company's second growth curve, consolidating the company's overall business development. Looking forward to the future, with the continuous advancement of strategic depth, the continuous expansion of the segment business and the continuous tapping of operational capabilities, this business segment will also open up greater imagination space for the company's future growth.

It is worth mentioning that during the new chamber of commerce in October last year, Seazen Holdings also officially released the "in-depth operation strategy", focusing on the further improvement of Wuyue Plaza's service capacity and operating efficiency, and realizing the greater value of Wuyue Plaza.

In the short term, the company expects to open 12 new Wuyue Plazas in 2024 (including entrusted management projects in operation), and the total commercial operation revenue target in 2024 is 12.5 billion yuan, an increase of 10.39% compared with the commercial operation income achieved in 2023. Following this plan, we have also seen a clear performance growth path for the company.

d· Value reshaping in two-wheel drive mode

Seazen Holdings has adopted a two-wheel drive strategic model and has achieved good results in both real estate development and commercial operations.

Under this model, the company can not only obtain stable sales revenue through real estate development, but also obtain stable rental income and property management fee income through commercial operations.

At the same time, Seazen Holdings also showed a high gross profit margin in business management, and the financial report shows that in 2023, the gross profit margin of the company's property leasing and management will reach 69.90%. It is not difficult to expect that with the continuous expansion of the volume of this sector, the company's performance on the profit side will continue to increase in the future.

Based on the excellent performance of this business segment with stable cash flow, the company will also effectively reduce the overall operating risk and improve profitability and sustainable development ability.

Compared with traditional real estate development companies, the company's model will also have more security and the ability to go through the cycle, and have the foundation to obtain market premiums and even reshape valuations.

3· epilogue

With the release of the financial report, Seazen Holdings has won the favor of a number of institutions.

Among them, the research report of Galaxy Securities pointed out that the company's sold outstanding resources are sufficient, and the performance is locked in advance; business operations continue to grow, and the two-wheel drive supports the company's income; the company operates well and the financing remains smooth. Maintain the company's "Recommended" rating.

Founder Securities Research Report believes that the company has achieved remarkable results in recovering payments, with abundant unresolved resources sold and continuous improvement of commercial output capabilities. The first coverage is given a "Recommended" rating.

Ping An Securities mentioned that the company's commercial real estate is operating well, and the "residential + commercial" two-wheel drive model is still expected to escort the subsequent development and maintain the "recommended" rating.

Soochow Securities said that Seazen Holdings has adopted a strategy of focusing on high-energy cities and stable commercial operations. As a high-quality private enterprise, the company's financing environment has improved, and it is optimistic about its medium- and long-term development and maintains a "buy" rating.

Judging from the optimistic logic of major institutions on Seazen Holdings, on the one hand, it generally recognizes the company's two-wheel drive strategic model, believing that it will provide the company with a stable source of income and profit growth space. At the same time, it is also highly optimistic about the company's resource reserves and commercial output capabilities, especially for the abundance of outstanding resources sold and the continuous growth performance of commercial operations. In addition, institutions are also optimistic about the company's financial position and financing environment, believing that Seazen Holdings has the ability to meet the challenges and maintain steady development.

From the perspective of professional institutions in the market, it is enough to see that Seazen Holdings has a good operating foundation and performance growth potential, and with the gradual recovery of the industry in the future, it is believed that the company will also achieve better performance in the new market cycle.