The operating income of 2023Q3 is -6.8%, net profit is -44.8%; the operating income of 2023Q1-Q3 is -0.9%, and net profit is -19.4%. The temporary pressure on performance is mainly affected by factors such as the complex international external environment and insufficient domestic demand. During the performance period, the company actively promoted international layout, expanded business categories, and deepened its digital strategy. The value of the company's high dividend yield is highlighted, and the controlling shareholder's repurchase shows confidence in long-term development. We gave the company a target price of 8.0 yuan for 2023 to maintain the “increase in holdings” rating.

The company's third-quarter results are temporarily under pressure. In 2023Q3, the company achieved operating income of 128.8 billion yuan, down 6.8% year on year; net profit was 290 million yuan, down 44.8% year on year, corresponding to net profit margin of 0.2%, down 0.2 pct year on year. In 2023Q1-Q3, the company achieved operating income of 40.7 billion yuan, down 0.9% year on year; net profit was 1.87 billion yuan, down 19.4% year on year, corresponding to net profit margin of 0.5%, down 0.1 pct year on year.

The pressure on the company's performance in the third quarter was mainly affected by factors such as the complex international external environment and insufficient domestic demand, as well as losses in some of the company's investment projects. At the same time, some types of supply chain management businesses lost money due to market conditions.

Actively promote international layout and expand business categories. 2023Q3, the company established the Dubai platform in the UAE to expand the Middle East market, set up an ITG-STS joint venture in Singapore to carry out maritime forwarding business, set up Indonesian Derun Shipping Company to carry out domestic trade and shipping business in Indonesia, and set up new offices in Chile, Turkey and Thailand to expand the metal supply chain business. In terms of industrialization, the company continues to develop new business categories, develop new rare earth materials business, promote natural gas business through strategic cooperation with Foshan Energy, and Indonesian subsidiaries obtain local coal management qualifications.

Deepen digital strategies and empower partners. 2023Q3, the company promoted and launched the “China Trade Cloud Chain · Egret Agricultural Care” for the agricultural products industry chain; the “China Trade Cloud Chain · Gold Trade Connect” supply chain fintech platform in cooperation with JD Technology officially launched the procurement of financing products; through the Global Shipping Business Network Platform (GSBN platform), COSCO Shipping Group completed the final confirmation of the country's first electronic bill of lading for coal bulk import business, and officially completed the first application in dry bulk transportation scenarios.

The high dividend value is highlighted, and the controlling shareholder's repurchase shows confidence in long-term development. The company's dividend ratio and cash dividend ratio have continued to grow in recent years. The dividend ratio of 2023H1 was 8.40%, higher than Xiamen Xiangyu (7.01%), C&D Co., Ltd. (7.33%), Zheshang Zhongtuo (5.61%), and Bussan Zhongda (3.04%). In October 2023, the company announced the controlling shareholder's holdings increase plan. The controlling shareholder Guomao Holdings and its co-actors plan to increase their holdings of the company's shares through centralized bidding transactions and other means within 6 months from the date of disclosure of the announcement. The cumulative increase in holdings is not less than RMB 50 million and no more than RMB 10,000 million, demonstrating confidence in the company's continued development in the future.

Risk factors: commodity prices fluctuate greatly; the operation of the company's supply chain model falls short of expectations; the impact of geopolitical conflicts on the company's commodity supply chain; there is some uncertainty about the company's health technology business development.

Profit forecasting, valuation and ratings: Looking ahead to the fourth quarter, the company will continue to promote industrialization, internationalization and digital strategies; the supply chain management business will focus on the direction of industrialization, enhance comprehensive service capabilities, and accelerate domestic and international layout; the health technology business will continue to promote the upstream and midstream medical device business layout. In view of the temporary pressure on the company's performance in the first three quarters, we lowered the company's 2023/2024 revenue to 535.3 billion yuan/607.1 billion yuan (original forecast: 588.4 billion yuan/666.9 billion yuan), adding a 2025 forecast of 686.9 billion yuan; lowered the 2023/2024 net profit forecast to 3.03 billion yuan/3.51 billion yuan (original forecast: 3.77/4.11 billion yuan), adding 3.68 billion yuan to the 2025 forecast. Referring to the 2023 P/E valuation level of comparable companies (Wind unanimous expectations: Xiamen Xiangyu 6.5x, Bussan Zhongda 5.9x, Zhejiang Zhongtuo 5.0x, C&D Co., Ltd. 2.9x), considering that the company is actively transforming its business layout as a leader in the bulk supply chain, the dividend rate is higher than that of peer companies, and the increase in shareholders' holdings shows confidence in the company's long-term development, giving the company 5.8x PE in 2023, corresponding to the target price of 8.0 yuan in 2023, maintaining the “increase in holdings” rating.