The annual results were dragged down by the development business, and the operation and service business grew steadily or increased cash flow resilience; the sales scale continued to decline due to the market and will still face some downward pressure in the future; 14 new shopping centers are planned to be opened in 24 to provide a guarantee for operating and service business revenue growth and incremental financing; the scale of debt declined in an orderly manner, and the steady increase in operating property loans contributed to incremental financing; 24E/25E/26E EPS is expected to be 2.1/2.2/2.4 yuan/share (+1%/+6%/+11% year-on-year, respectively), corresponding to the current stock price PE is 4.8/4.6/4.1, respectively.

The full-year results were dragged down by the development business, and the operation and service business grew steadily or increased cash flow resilience. Operating income/profit before tax/net profit to mother in '23 were 18.7 billion yuan/24.7 billion yuan/12.9 billion yuan, respectively; (1) The year-on-year decline in operating income was mainly driven by real estate development business. Structurally, the development business achieved revenue of 155.9 billion yuan (-31% year over year), operating business achieved revenue of 12.9 billion yuan (+9% year over year), of which operation and service business (operation+service business) contributed 14 percent of revenue %, contributing more than 60% of net profit; (2) The lower profit growth rate before tax was mainly affected by the decline in gross margin and the increase in sales management expenses. Specifically, the overall gross margin in 23 fell 4.3 pct to 16.9% compared to 22 (the company recorded inventory impairment of 1 billion yuan under operating costs in '23). Among them, the gross margin of the development business fell 6.9 pct to 11.0%, and the gross margin of the operating business increased by 0.3 pct to 75.9%, and the gross margin of the service business increased by 2.1 pct to 31.0%, sales/management/ management Financial expense ratios were +0.8 pct/+0.3 pct/+0.0pct to 2.9%/3.0%/0.1%, respectively, and the ratio of investment income to income increased 0.3 pct to 0.9%; (3) The growth rate of net profit to mother was roughly similar to pre-tax profit, and minority shareholders' share of profit and loss did not change much. Specifically, income tax expenses (including land tax increases) increased 2.4 pct to 30.7%, and the ratio of minority shareholders' profit to net profit decreased by 0.8 pct to 25.0%.

Looking back, development settlement or delays reflect the downward trend in the industry over the past two years, while operating and service business revenue is expected to return to double-digit growth. In terms of development business, the 24-year completion plan is 15 million square meters (down 6% from the actual completion area in '23). According to the announcement, the average price sold at the end of '23 was about 13,762 yuan (down 10% from the end of '22). In terms of settlement volume and price decline, development business revenue may still face short-term downward pressure, and gross margin will be affected or fluctuate at the bottom in the past two years; in terms of operation and service business, observe the industry. The 23-year operating business may generally have measures such as adjusting business strategies and structures to determine the revenue of subsequent companies under first-mover advantage and long-term strategic determination It is expected to return to double-digit growth, driving the revenue and profit share of operations and services businesses to continue to increase.