The basic management market is steady and solid, and shareholder returns are maintained. In 2023, the company achieved revenue of 73.56 billion yuan, -0.1% year-on-year. Among them, property development and sales, property management services, and commercial property investment and operation contributed revenue of 71.68 billion yuan, 1.52 billion yuan and 360 million yuan respectively, -0.7%, +33.3% and +22.5% year-on-year respectively. As of the end of 2023, the company's net profit to mother was 901 million yuan, or -47.1% year-on-year; gross margin and net profit margin were 11.53% and 1.24%, respectively, -2.96 percentage points and -2.73 percentage points year-on-year, respectively. The board of directors recommended a dividend of HK$0.36 per share until the end of 2023. Since its listing in 2018, the company has maintained a competitive dividend policy in the industry for six years, and the controlling shareholder used shares in total for the two years 2021-22 to exceed HK$2 billion.

Financing continued to be smooth, and leverage declined in an orderly manner. In 2023, the company became the first private housing enterprise to obtain a risk mitigation certificate (CRMW) jointly created by the three authorities of China Debt Credit Enhancement, Bank of Communications and CITIC Securities. A total of 4.62 billion yuan of medium-term notes were issued each year. By the end of 2023, the company's total interest-bearing debt was 38.07 billion yuan, down 10.39 billion yuan from the same period in '22; the net debt ratio was 35.8%, the short cash debt ratio was 1.44, and the deducted balance ratio was 67.3%. The “three red lines” remained green, and financing costs remained low. The weighted average financing cost was 4.80%, which was outstanding in the private enterprise sector.

Focus on deep cultivation and steady optimization of soil storage. In 2023, the company successively acquired 5 plots of land in Guangzhou, Changsha, Foshan and other cities, with an investment cost of 2.24 billion yuan and an additional value of about 7.0 billion yuan. At the same time, since 2021, the company has continued to optimize the land storage structure and actively promote the clearance of low-level cities. It has completed a total of 45 equity return projects. Of these, 21 projects have been acquired, adding 9.84 billion yuan in equity value; 24 projects have been withdrawn, and the equity value has been reduced by 3.27 billion yuan. By the end of 2023, the company had basically withdrawn from cities such as Dali, Liuzhou, Zhongshan, Zhoushan, Taizhou, Shijiazhuang, and Taizhou.

“Development+operation+technology” integrated ecosystem to switch new growth momentum. On the property side, the service contract area for US Buy Services as of the end of 2023 was 90.32 million square meters, and the non-residential expansion contract area was about 9 million square meters; 36 low-quality projects were removed, with a total clearance area of 5.42 million square meters. On the commercial side, American Commercial's sales in 2023 were +62% year-on-year; the average daily passenger traffic reached 184,000, doubling the year-on-year increase. As a smart healthy life service provider, the company has been working hard on technology for many years. The green prefabricated industry Ruizhu Construction Technology added a contract amount of about 600 million yuan in 2023, with a cumulative production capacity of over 130,000 cubic meters, and third-party business accounting for 98%; Ruizhu Smart added 1.1 billion yuan in contract amount, of which third parties accounted for 41%, an increase of 15% over the previous year, and obtained more than 360 patents and software works.

Investment advice: Maintain an “better than the market” rating. Considering the company's significant advantages on the financing side, the land storage structure has been gradually adjusted to a high-energy core city. We gave the company a 24-year EPS of RMB 0.66, 6-7 times the PE valuation. The corresponding market value range was HK$62-7.3 billion, and the corresponding reasonable value range was HK$4.35-5.07 per share. (Not specified in this article; all prices are in RMB, 1 HKD = RMB 0.9062) Risk Warning: Market recovery falls short of expectations.