Jiangsu Zhongnan Construction Group (000961.SZ) releases 2023 annual performance forecast, delivering approximately 100,000 units.

Over the past year, the real estate policy has been highly dynamic, with specific measures implemented to optimize demand-side policies for home purchasing, support financing for real estate enterprises, and increase the construction of affordable housing. These actions have sent positive signals externally. Institutional reports indicate that the current policy environment is approaching the most relaxed stage of 2014. However, the industry's bottoming adjustment has led to a general decline in industry profit margins, gross profit margins, and asset values. Real estate enterprises have clearly suffered from the impact and influence at the operational level, and the real estate industry still cannot be described as optimistic. Institutional data shows that more than half of the real estate enterprises that have disclosed their 2023 performance forecast expect a net loss, with reduced profits becoming a common phenomenon in the real estate industry. On the evening of January 30th, Jiangsu Zhongnan Construction Group (000961.SZ) announced that the estimated net loss attributable to shareholders of listed companies for 2023 would be between 3 to 5 billion yuan, representing a year-on-year reduction in losses of 45.5%-67.3%. The announcement pointed out that the company's real estate business saw an increase in completed projects and improved revenue, but difficulties arose in the collection of revenue for construction projects and revenue recognition, leading to increased impairment provisions. Therefore, the company still reflects a net loss for the year, but the amount of losses has decreased compared to the previous year. In response, industry experts have expressed that the provision of impairment losses by listed real estate companies in 2023 actually aligns with industry expectations. "If the market improves in 2024, some companies may revert to partially recognizing impairment losses on assets, achieving better performance." In fact, in recent years, affected by the continuous downturn of the real estate market, the overall gross profit margin of the industry has decreased, and real estate companies have been actively taking various measures to actively respond to and resolve adverse factors. Looking back at 2023, Jiangsu Zhongnan Construction Group has made great efforts to establish a diversified delivery support system. In terms of ensuring delivery of houses, Jiangsu Zhongnan Construction Group delivered 100,000 units of housing in 64 cities in 2023, closely monitoring delivery progress, ensuring delivery quality, and making efforts to benefit the public. In terms of ensuring contract performance in the construction sector, Jiangsu Zhongnan Construction Group completed 61 contracted projects throughout the year, involving a project area of 4.68 million square meters, steadily advancing construction projects, adhering to engineering quality, and contributing to urban construction improvement. Data shows that in the first three quarters of 2023, the company achieved an average monthly operating cash inflow of 2.73 billion yuan, with a net cash flow generated from operating activities of 270 million yuan, maintaining positive values for six consecutive years. At the end of the third quarter, the company's monetary funds amounted to 9.11 billion yuan, ensuring the safety and stability of cash flow. As of the end of the third quarter of 2023, the company's interest-bearing liabilities amounted to 45.64 billion yuan, a decrease of 1.91 billion yuan from the end of 2022, maintaining the lowest ratio compared to total assets in the industry. Looking towards 2024, institutions generally believe that recently introduced policies such as the urban real estate financing coordination mechanism, the "white list" for financing support projects, and loans for commercial properties are beneficial in expanding the financing channels for real estate enterprises and strengthening market expectations, thereby driving market stabilization. From a medium to long-term perspective, the growth of self-occupancy demand brought about by urbanization trends is still increasing, and the industry still has significant development potential. Quality real estate companies such as Jiangsu Zhongnan Construction Group are expected to maintain strong resilience and development prospects during this industry bottoming period.