Incident: Xiamen International Trade announced its 2022 annual report. The company achieved operating income of 521.92 billion yuan in 2022, +12.3% year on year; achieved gross profit of 9.49 billion yuan, 18.5% year on year; and achieved net profit of 3.59 billion yuan, +4.4% year on year. Supply chain management business revenue was 505.77 billion yuan, +10.8% year on year, current gross profit margin was 1.49%, +0.24 pp year on year. The basic settlement of the 2022 Xiamen Guomao real estate project has been completed, and real estate operations will be withdrawn thereafter. The current dividend ratio is 39.9%, and the dividend rate is 6.9% based on the current A-share price.

The company withdrew from the real estate business and focused on the development of its main business. The company has sold its shares in two subsidiaries in the real estate sector to Guomao Holdings, the controlling shareholder. By the end of 2022, the company's real estate projects had basically been settled.

In the future, the company will focus on the core business of supply chain management and actively develop new businesses such as health technology. By the end of 2022, the company's supply chain management business accounted for 96.9% and the real estate business accounted for 2.2%.

Consolidate the advantages of core categories and actively expand new growth poles. The company strengthened upstream and downstream channel construction to further consolidate the competitive advantage of core categories. During the reporting period, the company's core category operating volume maintained a steady growth trend. The operating volume of iron ore, steel, grain and grain increased by more than 20%, 8%, and 50%, respectively, and the volume of copper ore, oil, feed and other categories increased by more than 100%. The company's new categories such as coal coke, silicon manganese, scrap steel, and LPG have begun to take shape. At the same time, the company continues to expand its layout in emerging business fields such as new energy and consumer goods.

Actively promote supply chain integration projects to achieve a win-win situation with industrial customers. During the reporting period, the company carried out the replication and optimization of integrated projects around a number of high-carbon ferrochrome iron and steel plants under Hunan Wantai Iron and Steel Co., Ltd., added 16 supply chain integration projects, and achieved operating revenue of 49.96 billion yuan from the ongoing supply chain integration projects, an increase of more than 70% over the previous year.

Strengthen industrial service capabilities and lay out key industrial nodes. The company increased joint ventures with leading enterprises in the industry. During the reporting period, the company added 23 new joint ventures, and invested more than 2.6 billion yuan with industry partners, continuously enhancing its industrial service capabilities. The company actively promoted investment and progress in key industries. ITG Amoy, its own 300,000-ton super-large tanker (VLCC) floating tank, was put into official operation in the Malacca Strait in February 2022, and became one of the floating tankers priced for fuel oil in the Prussian market in Singapore.

Profit forecasts and investment recommendations. We are optimistic about the future development of the bulk supply chain industry. It is estimated that the company's net profit for 2023/24/25 will be 33.6, 40.1, and 4.67 billion yuan respectively. The corresponding earnings per share will be 1.53, 1.82, and 2.12 yuan respectively, and the corresponding PE will be 6x, 5x, and 4x respectively, maintaining the “buy” rating.

Risk warning: risk of macroeconomic fluctuations, risk of exchange rate fluctuations, risk of commodity price fluctuations, etc.