Holding non-replicable scarce core assets: the company holds the TOD project in the center of Beijing CBD region, including office buildings, shopping malls, hotels and apartments with a wide range of functions. The CBD area is a mature business area, ranking first in Beijing in terms of comprehensive performance.

The stable operation of office buildings and shopping malls can contribute a stable source of income for the company: the main source of revenue of the company is property leasing and management business. In 2022, the revenue of property leasing and management business reached 3.168 billion yuan, an increase of 1.6% over the same period last year. Accounting for 92.0% of the company's revenue, office buildings and shopping malls accounted for more than 80% of the property leasing and management business, accounting for 85.2% in 2022. The company's office buildings and shopping malls are in a mature operation stage, and the rental rate can be maintained at more than 90% even during the epidemic. The 2023Q1 office rental rate is 96.1%, and the mall rental rate is 98.7%. In 2022, due to the reduction of rent waiver for some enterprises and the reduction of commission rent charged according to the proportion of mall tenants' turnover, the average rent of shopping malls dropped 1.4% year on year. 2023Q1, the average rent of shopping malls was + 3.0% year-on-year, and office rent was + 2.2% year-on-year. The unit rent began to pick up. We believe that with the elimination of the impact of the epidemic, the rent of office and shopping malls in the mature operation period is repaired, and the occupancy rate remains high, and the revenue of this business sector is expected to maintain relatively stable growth in the future.

The restoration of apartments and hotels is expected to contribute to new growth points: the company's apartments will be renovated and upgraded from 2018 to 2020. After the completion of the renovation, the average rent of apartments in 2020 will be 419 yuan / square meters / month, an increase of 70.3 percent over the same period last year. Since then, it has been maintained at more than 370 yuan / square meters / month. Relying on the supporting facilities of the International Trade Center, the apartment is expected to become the preferred rental location for the surrounding high-income groups, and the rent unit price still has the potential to increase. According to the historical operation of the apartment, the rental rate remained above 85% during the mature operation period, such as 2013-2016; since the completion of the renovation, the apartment rental rate has recovered year by year, and the 2023Q1 rental rate has reached 77.6%, but there is still about 10% room for improvement before the mature operation period. Due to the impact of the epidemic, the revenue of the hotel business dropped sharply by 41.5% in 2022 compared with the same period last year, and according to the operation situation before the epidemic (2013-2018), hotel revenue can maintain a certain positive growth every year. The new International Trade Hotel opened in May 2017, and the hotel business revenue in that year was + 26.2% last year + 34.1% compared with the same period in 2018. Based on the past operation of the hotel, we speculate that if the hotel business can return to the pre-epidemic level after the impact of the epidemic is eliminated, it is expected to contribute new performance growth points for the company.

Operating cash flow continues to flow in net, and the dividend yield is attractive: the company's dividend ratio is relatively high and is still increasing year by year, reaching 63.2% in 2022 and 3.55% at present. The company is a cash cow company, the operating cash flow has been maintained positive, and there is no large-scale investment transformation plan in the short term. Stable cash flow can effectively support dividends, and the company is expected to continue to contribute stable dividend returns.

Investment advice: we believe that the value of the assets held by the company is high, the management style is sound, and we do not expand blindly. After the impact of the epidemic is eliminated, the hotel and apartment business is expected to contribute to its performance growth. At the same time, its dividend is stable, and the proportion of dividend is still increasing, which is highly attractive. We estimate that the EPS of the company from 2023 to 2025 is 1.55, 1.62 and 1.68 respectively, and the corresponding PE is 12.46, 11.97 and 11.54x, respectively. Coverage for the first time, giving a "overweight" rating.

Risk tips: rent growth is less than expected, the economic downturn leads to insufficient demand in shopping malls, a decline in occupancy rates, increased competition brought about by increased office supply in the CBD region, a reduction in the dividend ratio, and so on.