霍顿房屋：利润率拐点尚需等待

Investment Rating - The report maintains a "Buy" rating for the company with a target price of $178.00 [1][5] Core Views - The company reported a revenue decline of 10% year-on-year to $6.89 billion and a net profit drop of 30% to $590 million in FY26Q1, with a gross margin decrease of 1.9 percentage points to 23.2% [1][2] - The decline in revenue is attributed to a decrease in both the number of units sold and the average selling price, with unit sales down 7% and average price down 3% year-on-year [2] - Despite the current pressures, the company is implementing measures to improve turnover efficiency and sales incentives, which may help stabilize performance [3] - The outlook suggests that easing interest rates could gradually alleviate the housing supply-demand imbalance in the U.S., potentially enhancing sales and profit elasticity for the company [1][3] Summary by Sections Financial Performance - FY26Q1 revenue was $6.89 billion, down 10% year-on-year, with net profit at $590 million, down 30% [1][2] - Gross margin for Q1 was 23.2%, a decrease of 1.9 percentage points year-on-year but an increase of 1.5 percentage points quarter-on-quarter [2] - The company expects FY26 operating cash flow to reach $3 billion, with a plan for $2.5 billion in share buybacks and $500 million in dividends [4] Market Conditions - The U.S. housing market showed slight improvement in Q4 25, with a 20 basis point decrease in 30-year mortgage rates, although high rates and low affordability continue to suppress demand [3] - The company’s sales units and average price showed mixed results, with net sales units up 2.6% but average price down 2.4% year-on-year [3] Capital Structure and Shareholder Returns - The company maintains a healthy capital structure with a debt-to-asset ratio of 29%, down 1 percentage point from FY25Q4 [4] - Operating cash flow increased by 32% year-on-year to $850 million, with cash on hand exceeding $2.55 billion, more than double the bonds due in FY27-26 [4] Profit Forecast and Valuation - The company’s net profit forecasts for FY26-28 are $3.442 billion, $4.059 billion, and $4.610 billion, respectively, with a CAGR of 9% over the three-year period [5] - The report maintains a price-to-tangible book value (P/TBV) estimate of 2.12x for FY26, reflecting a 35% valuation premium due to the company's leading market position and strong shareholder returns [5]