BROAD HOMES(02163.HK)：LOOKING FOR A RECOVERY IN 2025 MAINTAIN "BUY"-格隆汇

机构：国泰君安国际
研究员：Gary Wong

We lower the TP to HK$2.90, but reiterate “Buy” rating. We lower the EPS forecasts for Broad Homes (the "Company") in 2024/ 2025 to -RMB0.217/ RMB0.037, respectively, and initiate the EPS forecast for 2026 at RMB0.393. We lower the TP to HK$2.90, equivalent to 10.8x/ 8.0x/ 5.8x 2024/ 2025/ 2026 EV/EBITDA.
2023 shareholders’ net profit was -RMB389 million, and results were below expectation. 1) Total revenue in 2023 was RMB2,201 million, down 1.4% YoY, of which PC unit manufacturing was RMB1,913 million, down 5.5% YoY, PC equipment manufacturing was RMB47 million, down 26.0% YoY, modular integrated products manufacturing was RMB81 million, down 37.4% YoY, and digital EPC was RMB160 million, up 871.3% YoY. 2) In 2023, the gross margin was 24.3% (+7.6 ppt), the expenses ratio was 33.9% (-4.4 ppt), total debt ratio was 63.3% (-0.9 ppt).
Net operating cash flow increased YoY, while accounts receivable and impairment losses decreased YoY in 2023. 1) Net operating cash flow in 2023 was RMB580 million (2022: RMB423 million). 2) Net operating cash flow and investing cash flow combined was +RMB476 million (2022: -RMB41 million). 3) Accounts receivable decreased 5.8% YoY to RMB2,628 million, and impairment losses decreased 95.3% to RMB4 million.
New contracts signed increased 25.3% YoY to RMB2,969 million in 2023. 1) Among them, PC unit manufacturing was RMB2,650 million, up 35.9% YoY, modular integrated products manufacturing was RMB82 million, down 64.3% YoY, and digital EPC was RMB238 million, up 24.8% YoY. The Company continues to incorporate digital technology with its CPS+ intelligent management platform, boosting the efficiency of intelligent construction solutions and addressing traditional construction challenges like prolonged timelines, high costs, and extensive resource use. The Company specializes in industrial parks and campus developments, providing rapid and effective solutions, and has executed over ten digital fully prefabricated projects, including notable developments at Beijing University of Traditional Chinese Medicine and Changde Economic Development Zone. 2) Actively expanding in the international market by supporting the "Belt and Road" initiative. In 2023, the Company served over 300 overseas customer batches, with more than 40 projects advancing to design and contract phases. Customized "Mofang” building products have been successfully implemented in Saudi Arabia and Los Angeles, USA.
Risks: 1) Government infrastructure spending may be lower than expected; 2) overseas project risks.