Main points of investment
Event: the company released its mid-2023 report. In the first half of 2023, the company achieved revenue of 1.91 billion yuan, down 21.2% from the same period last year, and its net profit was 770 million yuan, down 8.5% from the same period last year.
The decline in revenue from the park's development business compared with the same period last year is a drag on performance. In the first half of 2023, the company's revenue fell 21.2% compared with the same period last year, of which the revenue from the park development business was 1.5 billion yuan, down 25.9% from the same period last year. We believe that it is mainly due to the slow pace of land sales, resulting in the lag of income settlement of primary land development; green public business revenue of 340 million yuan, a slight drop of 0.9% compared with the same period last year. In addition, the decline in performance compared with the same period last year was also due to: (1) the company's gross profit margin decreased by 7.4pct to 52.5%; (2) taxes and surcharges increased by 86.3% year-on-year, mainly due to the difference between taxes payable and withheld taxes on liquidated items carried forward in the same period last year. However, the investment income brought by the disposal of subsidiary shares and the fair value change income brought by the investment evaluation appreciation of industrial funds offset the above effects to a certain extent. As a result, the decline in net profit is smaller than that in revenue.
The business of Zhongyuan District starts the transformation of light assets. By the end of the first half of 2023, the company has signed a total of 12 Zhongyuan projects in the area, with a total construction area of 1.72 million square meters. At the same time, set up the real estate fund management platform Zhongxin Yuanrui, complete the investment of the first asset management business Taicang Huangjing project, and make a good project reserve and accumulate experience for the asset securitization of Zhongyuan business in Zhongyuan area in the future.
The growth rate of green public services has been improved, and photovoltaic projects have been steadily expanded. In June 2023, Zhongxin Suzhou Industrial Park Municipal Public Development Group Co., Ltd. officially changed its name to Zhongxin Suzhou Industrial Park Green Development Co., Ltd. New energy business: in the first half of the year, the company established joint ventures with Singapore Yige New Energy, Shuangjie Electric and other well-known enterprises in the industry. By the end of the first half of the year, Zhongxin Green Energy and Zhongxin Chunxing, Zhongxin Xude and other participating companies have cumulatively completed grid-connected 170MW, project under construction 65MW, reserve project 500MW. New environmental protection business: the company takes industrial wastewater as the development direction and reaches the cooperation intention of the sensing valley industrial wastewater plant project with Bengbu Economic opening District.
The ability of industrial investment has been continuously strengthened to achieve a high level of integration between production and cities. In terms of fund investment: by the end of the first half of 2023, the company had subscribed a total of 43 funds, an increase of 5 over the end of 2022, totaling nearly 4 billion yuan, driving a total investment of 57 billion yuan in each park. In terms of science and technology direct investment: a total of 28 science and technology projects were invested, with a total investment of 500 million yuan and a total investment of 5.5 billion yuan. In June 2023, the company successfully issued 1 billion yuan of corporate bonds for industrial investment business with a coupon of only 2.9%, storing energy for follow-up business development.
Profit forecast: the rapid development of the company's two wings of business, especially the steady expansion of photovoltaic projects, is expected to form a new performance growth pole. We maintain its 2023-2025 homing net profit of 1.80,000,000 RMB 2.01kg; the corresponding EPS is 1.20x1.34max 1.49RMB / share, and the corresponding PE is 7.7X/6.9X/6.2X, maintaining the "buy" rating.
Risk hints: Suzhou and its surrounding areas of economic development stagnation risk; land market downside risk; macroeconomic environment and policy risk.