Performance grew steadily, incubation and investment linkages accelerated industry cultivation efforts, maintained a “buy” rating, and published the 2023 annual report. The company's revenue and profit grew steadily, the leasing business remained steady, and industrial investment continued to increase. Benefiting from the company's larger property volume and faster development pace, we raised 2024-2025 and added a profit forecast for 2026. The company's net profit for 2024-2026 is 11.25, 13.34, and 1,461 billion yuan (original value of 9.46 billion yuan and 1,098 billion yuan in 2024-2025), corresponding EPS is 0.73, 0.86, 0.94 yuan, and the corresponding PE is 27.8, 23.5, and 21.4 times, maintaining a “buy” rating.

Rental revenue led to revenue growth, and net profit to mother increased. The company achieved revenue of 2,026 billion yuan in 2023, +6.24% year over year; realized net profit of 948 million yuan, +15.29% year over year; and achieved net operating cash flow of -2,785 million yuan, or -511.19% year over year. The increase in the company's revenue was mainly due to +25.78% year-on-year rental revenue (there was an impact of rent reduction in the same period in 2022); the increase in net profit due to (1) the completion of land value-added tax, sales tax and surcharges reduced by 220 million yuan in the previous year when the company completed land value-added tax settlement for some projects; (2) the increase in the fair value of the company's financial assets increased year-on-year; the decrease in cash flow was mainly due to a sharp increase in park development and inventory investment.

Project construction continues to advance, and rental revenue continues to rise

In 2023, the company is in a large-scale, fast-paced carrier development cycle. It has 19 major development and construction projects, with a total construction area of 3.24 million square meters, and a total planned investment of 50.4 billion yuan. It completed an investment of 6 billion yuan that year, with a total completion area of about 320,000 square meters. The façade façade of Zhangjiang Science Gate has all been completed, and the overall project progress is over 70%. The overall project is expected to be completed and delivered in 2025. The company achieved annual real estate rental revenue of 1.05 billion yuan, +25.78% year-on-year, and the total rental real estate area by the end of the year was 1.353 million square meters. The company achieved a sales area of 30,600 square meters in 2023, with a sales amount of 955 million yuan, -9.2% year-on-year. Sales carry-over revenue mainly comes from the office and parking space business.

Industrial cultivation has been accelerated, and innovation incubation has been very effective

The company insists on pooling market resources to promote industrial development through “direct investment+fund+incubation”. In 2023, the company achieved an investment income of 206 million yuan, +72.52% over the same period last year, mainly due to the company's equity disposal and the year-on-year increase in investment income from financial assets. The company directly invested in 52 projects throughout the year, with a total investment of 3.86 billion yuan. It has completed fund pledges of 1.13 billion yuan to raise and establish the Suifeng Phase II Fund. The company's investment enterprises have developed rapidly. Blue Rocket Technology and Zhiji Auto have achieved breakthroughs in development. Nanxin, Huazhiwei, Huaqin Technology, and Glencansi completed the listing within the year.

Risk warning: Real estate industry sales downside risks, business risks due to policy adjustments, and industrial investment risks.