EBITDA in '22 was +63% year on year, and core performance was +74% year on year, showing impressive performance after ARA. In 2022, the company's operating income was 821 million US dollars, +103% year on year; EBITDA 1,069 million US dollars, +61% year on year; adjusted EBITDA 11.52 million US dollars, +63% year on year; PATMI (net profit back to mother) was 574 million US dollars, +64% year on year; adjusted PATMI was 655 million US dollars, +74% year on year; company gross profit margin was 96%, +10pct year on year, net interest rate of 70% year on year, -16pct year on year; administrative expenses 491 million US dollars, +103 %, financing costs of $222 million, +36% year on year; other income was $510 million, +36% year on year, mainly fair value income, income from sale of assets and shares, dividend income, and interest income.

The investment business EBITDA remained stable, and the property rental rate reached a new high. In 2022, the company's investment business achieved revenue of 97 million dollars, -17% year on year; EBITDA was 334 million dollars, -3% year on year; the decline in investment business EBITDA stemmed from the sale of Korean real estate trusts in '21, which led to a year-on-year decrease in joint investment income and a decrease in fair value income in '22 due to a higher base. The overall rental rate of the company's properties increased to 95% in 2022, an increase of 1 pct over the full year of '21, with 98% excluding Greater China; the leased area exceeded 4.6 million square meters. In addition, a 7.5% weighted rent growth rate was achieved in the new economy property portfolio, with a weighted lease expiration date of 4.5 years.

EBITDA in fund management business has increased rapidly, AUM has exceeded 150 billion US dollars, and the growth rate of asset management scale in the new economy is impressive. In 2022, fund management revenue was $713 million, +192% year on year; EBITDA was $574 million, +188% year on year. The performance of the fund management business grew rapidly, benefiting from the company's acquisition of ARA completed in January 22, which promoted a rapid increase in the scale of asset management. The increase in scale is conducive to improving the company's management capabilities and expanding the investor base. In 2022, the company's AUM increased to 156.4 billion US dollars, +296% year on year. If the base figure takes ARA into account, it is still +11% year on year; of this, the asset management scale of the new economy is 73 billion yuan, +85% year on year, and if the base figure takes ARA into account, +23% year on year. The company raised 7.6 billion US dollars through 28 established and additional fund projects, +31% year on year, of which more than 85% of the new capital raised was used in the new economy. In addition, the company also has $19.9 billion to be invested and can be deployed to new investment projects.

The commencement and completion of development business has accelerated, and the scale of land storage has grown impressive. In 2022, development business revenue was $11 million, -76% YoY; EBITDA343 million dollars, +46% YoY. The growth rate of EBITDA in the development business is impressive, mainly due to significant increases in fair value income from development projects, share of joint venture company revenue, and development project completion income. In 2022, the company's operating and development area was 38 million square meters, +49% year on year; land reserves exceeded 6 million square meters, +54% year on year. The company's projects started and completed in '22 were +20% and 85%, respectively; the company's development projects under construction reached US$11.9 billion, and more than 80% will be completed in 2023-2025, which indicates that subsequent deliveries will be considerable, driving scale expansion.

BS forms have expanded, finances are stable, long-term borrowing periods have been lengthened, and costs have remained low. By the end of 2022, the company's total assets were US$16.20 billion, +73% year on year; cash on hand was US$1.81 billion, +19% year on year; bank loans and other loans were US$5.5 billion, +29% year on year; net debt/total asset ratio was 22.8%, year on year -5.1 pct, net debt ratio was 40.4%, year on year -18.7pct; weighted average debt maturity time was about 5.1 years, up 0.6 years year on year. The company's comprehensive financing cost in '22 was 4.2%, +0.1pct compared to the previous year.

Investment analysis opinions: impressive performance, stable finances, promising prospects for the new economic model, and maintaining the “buy” rating. The logistics real estate industry is in a golden age of rapid development. As a leading logistics real estate company in the Asia-Pacific region, ESR continues to expand its asset-light strategy and expands its management scale by acquiring ARA. We believe the company will maintain long-term and steady growth. Considering that the pace of completion of the development business is uncertain, we lowered net profit to the mother for 2023-2024 by 630,000 to 70 billion US dollars (original value of 770 million US dollars and 8.7 billion US dollars), adding 25-year results to 760 million US dollars. The current price corresponds to the 23/24 PE 12.0/10.9 times respectively, maintaining the “buy” rating.

Risk warning: The company's expansion rate fell short of expectations, and the e-commerce industry fell short of expectations.