The main developer of Suzhou Industrial Park, and the park's development and operation business accounts for about 80% of revenue. In 1994, the company was jointly established by the Chinese and Singaporean governments. The construction and operation period was early, forming a pattern of “park development and operation as the main body, green utilities and industrial investment as the two wings”. In the first half of 2023, the two accounted for 78% and 18% of revenue, respectively. The income from industrial investment was reflected as net income from changes in fair value. The development and operation of the park has been expanded from Suzhou to many places such as Nantong and Jiashan. There are 9 expansion projects, mainly for first-level land development, and the company continues to expand the park business in the district to obtain stable rental income.

It is estimated that the company will be able to sell a total of about 1,000 hectares of commercial and residential land by the end of 2022, which can support land sales over the next 10 years. The agreed land storage value is about 33.6 billion yuan, and the cost plus model park execution cost is about 23 billion yuan. 1) The ability to attract investment is the core competitiveness of the industrial park, which guarantees land concessions in the park and the rental of central park properties in the district. Suzhou Industrial Park has now become one of the core regions in Suzhou. The 2023 H1 land sale ranked first in all districts in terms of floor price and premium rate. 2) By the end of 2022, we expect that each of the company's parks can sell a total of about 1,000 hectares of commercial and residential land, of which the agreed land storage value is about 33.6 billion yuan, and the cost bonus model park implementation cost is about 23 billion yuan. If the company sells 100 hectares of commercial and residential land every year, it is expected to support land sales for the next 10 years. 3) In 2022, the Suzhou Xietang and Jiashan projects began to contribute revenue. Mature projects such as Sutong and Suqian have basically been sold steadily, and stable income from land concessions is guaranteed.

The company is speeding up the rental business in Zhongyuan in the Outer Development Zone. The annual guaranteed revenue is estimated to be about 470 million yuan, and rents are expected to increase by 9% from 2022 to 2027. 1) The company's strong ability to attract investment brings high-quality customers with long rental periods and high rent levels, including Samsung, Magna International, Delphi Pike, etc. 2) Zhongyuan Property in the company's district has a location advantage. We estimate that 78% of the properties that have been put into operation in the first half of 2023 are located in Suzhou Industrial Park, about 1.81 million square meters. Of these, industrial plants account for 61%, the occupancy rate remains 95%, and rent stability is guaranteed. It is estimated that the stable rent for properties in Suzhou Industrial Park is about 470 million yuan. 3) In 2019, the company started Zhongyuan Property in Waituo District. Exituo has put into operation 500,000 square meters. Currently, 1.2 million square meters are still to be put into operation. Investment real estate increased 110% to 5.1 billion yuan at the end of the third quarter of 2018-2023. According to our estimates, if 1.2 million square meters of industrial carriers are put into operation within 5 years, rents are expected to increase by 9% per year from 2022 to 2027.

“Two Wings” green utilities and industrial investments rely on “main” businesses, and green utilities are expected to achieve annual growth of more than 15% in 2023-2025. 1) The green utility business has franchises. Along with the expansion of the industrial park, a large number of projects will be put into operation in 2020. In addition, the company plans to hold 2 GW of distributed photovoltaic power plants in 2025, which is expected to bring a stable annual cash flow of 1.25 billion dollars after full operation. It is expected that green utility revenue will maintain an annual growth of more than 15% from 2023 to 2025. 2) As a high-quality park developer, the company has the first-mover advantage of obtaining high-quality resources in industrial investment, has a deeper understanding of the risks and values of the invested companies, and the park focuses on new materials, semiconductors, pharmaceuticals and other industries, and the return on investment is guaranteed. Beginning in 2021, investment income has entered the payout period. Net income from fair value changes for the first three quarters of 2021, 2022, and 2023 was 2.2, 1.32, and 253 million yuan, respectively. In the future, as large-scale invested projects achieve results or go public, we expect that the company's fair value change earnings may continue to increase.

Investment advice: As the main developer of the Sino-Singapore Joint Venture Suzhou Industrial Park, the company has strong investment promotion capabilities, a good industrial park location, and the green utility business has franchise rights to ensure the stable revenue of the company's various businesses. Choose a park development company with a good industrial park location, a high proportion of self-owned properties, and a stable performance outlook as a comparable company. We expect the 2023-2025 EPS of the Sino-Singapore Group to be 1.31, 1.53, and 1.85 yuan, respectively. Referring to industry-comparable company valuations and considering that land concessions are uncertain, the company will be given 8 times PE in 2024, corresponding to the target price of 12.26 yuan in 2024. It is covered for the first time, and a “recommended” rating is given.

Risk warning: the industry continues to decline sharply; competition in different parks to attract investment intensifies; industrial investment risks