Core views

In 2023, the company achieved revenue of 2.03 billion yuan, up 6.2% year on year, mainly due to achieving rental revenue of 1.05 billion yuan, up 25.8% year on year; realized net profit of 950 million yuan, up 15.3% year on year. The performance growth rate was higher than the revenue growth rate mainly due to a sharp drop in taxes and surcharges due to the completion of land tax increases and an increase in investment income and fair value. The company's construction in the Zhangjiang region is progressing steadily. The construction area is 320,000 square meters completed in 2023, and nearly 2.68 million square meters are still expected to be completed in the next three years, which will support steady growth in real estate sales and leasing scale. Industrial investment strongly supports the company's performance. Investment income and profit and loss from changes in fair value in 2023 totaled 850 million yuan, an increase of 30.7% over the previous year, contributing nearly 90% to the performance.

occurrences

The company released its 2023 annual report. In 2023, it achieved operating income of 2.03 billion yuan, an increase of 6.2% over the previous year, and realized net profit of 950 million yuan to mother, an increase of 15.3% over the previous year.

Brief review

Rental revenue grew rapidly, and performance improved steadily. The company achieved revenue of 2.03 billion yuan in 2023, an increase of 6.2% over the previous year, mainly due to achieving rental revenue of 1.05 billion yuan, an increase of 25.8% over the previous year, and realized net profit of 950 million yuan, an increase of 15.3% over the previous year. In 2023, the company's comprehensive gross margin was 58.0%, down 4.1 percentage points from the previous year; the performance growth rate was higher than the revenue growth rate due mainly to: 1) completing the land tax increase settlement of some projects during the year, which reduced the amount of tax increases, taxes and surcharges raised in previous years by a total of 100 million yuan, a year-on-year decrease of 68.5%; 2) achieved investment income of 210 million yuan, an increase of 73.1% year on year; achieved profit and loss from fair value changes of 650 million yuan, an increase of 21.4% year on year.

The construction of the Zhangjiang region is progressing steadily, supporting the growth of the main real estate industry. The company's construction in the Zhangjiang region, including the power collection port, Science Gate, and the northwest region, is progressing steadily. There are 19 major development and construction projects, with a total construction area of 3.24 million square meters, 2 completed projects in 2023, with a completion area of 320,000 square meters; all 16 projects with a construction area of about 2.68 million square meters are expected to be completed in the next three years. As future projects are completed and put on the market, the scale of the company's properties for sale and lease will be expanded to support the steady growth of the main business.

Industrial investment has borne fruit frequently, strongly supporting performance. The company continued to invest in the industry. By the end of 2023, it had accumulated 52 direct investment projects, with a total investment of 3.86 billion yuan; fund pledges of 1.13 billion yuan were completed during the year. Investment companies developed rapidly, with the Blue Rocket liquid oxygen rocket successfully tested for the first time in the world; Zhiji Auto LS7 and LS6 were officially launched in February and October 2023, respectively; the company's 16 major holding and participating companies achieved a total net profit of 9.1 billion yuan during the year, an increase of 59.1% over the year. In 2023, the company achieved a total of 850 million yuan in investment income and profit and loss from changes in fair value, an increase of 30.7% over the previous year, contributing nearly 90% to performance.

The profit forecast was lowered and the buying rating was maintained. We forecast the company's EPS for 2024-2026 to be 0.71/0.82/0.92 yuan respectively (the original forecast was 0.80/0.92 yuan for 2024-2025). I am optimistic that the continued promotion of regional construction in Zhangjiang will bring about an increase in the scale of the company's main business, as well as the strong support of industrial investment to performance, and maintain the purchase rating.

Risk analysis

The company's main risks are:

1) Property sales settlement may fall short of expectations: The company's property sales method is mainly packaged sales of R&D office and other types of properties. If affected by factors such as increased market supply and reduced customer demand to purchase properties, the company's property sales scale may be uncertain.

2) The rental level of property may fall short of expectations: the company's nearly 2.68 million square meters of properties is scheduled to be gradually completed and delivered within three years. If the pace of completion and delivery falls short of expectations, the scale of the company's rental properties will be greatly affected; in addition, if R&D office properties in other areas attract more market demand, the occupancy rate of the company's own properties may be adversely affected.

3) The development of the investment target may fall short of expectations: the company is making a lot of efforts in the field of industrial investment, and the investment targets it holds are in many industries. If the future development of the investment target falls short of expectations, the company's return on investment will be negatively affected, which in turn affects profit on the reporting side.