Maintain the increase in holdings. The performance is in line with expectations, maintaining the forecast that EPS will increase by 21/ 18% to 1.00/1.18 yuan in 2024-2025, and EPS will increase 12% at 1.31 yuan in 2026. Due to the decline in the valuation system for market-related sectors, the target price was lowered to 17.5 yuan, corresponding to 17.5 times PE in 2024.

Net profit due to mother increased by 43.8% in 2023, in line with expectations, and increased 170% in the Q4 single quarter. (1) 2023 revenue of 1.51 billion yuan decreased by 17.5% (Q1-Q4 decreased by 31.7/7.5/20.0/ 14.4%), of which 1.12 billion yuan for design decreased by 9.1%, cost consulting by 190 million yuan decreased by 14.5%, and project 160 million yuan decreased by 49.6%. Net profit to mother of 161 million yuan increased by 43.8% (Q1-Q4 increased by 208.8/-7.0/ -10.7/ 170.1%), after deducting not 129 million yuan, increased by 48.1%.

Net operating cash flow increased 8.2% in 2023, and accounts receivable and impairment declined. (1) Net operating cash flow of $287 million in 2023 ($265 million in '22), Q1-Q4 was $8/-0.9/-2.0/320 million (-1.5/-0.2/0.9/$350 million in '22). The payout ratio in 2023 is 107% (102% in '22), and the payout ratio is 34% (40% in '22). (2) The total cash flow from operation+investment was 159 million yuan (34,900 yuan in '22). (3) Accounts receivable of $445 million decreased by 26.1%, and impairment losses totaled $57.08 million ($97.39 million in '22).

Accelerate the integration of AI technology and design throughout the process, and participate in low-altitude economy projects. (1) In 2023, 1.55 billion yuan of new architectural design contracts increased by 2.46% (down 38% in the same period in '22), of which prefabricated design increased by 43% to 878 million yuan, accounting for 56%, cost consulting of 164 million yuan decreased by 23%, and full-process engineering consulting decreased by 22%. (2) The 2023 Central Economic Conference will accelerate the renovation of urban villages, etc. (3) The company stated on the investor interactive platform that the business involving the low-altitude economy is mainly related to the planning and design of aviation towns. (4) Based on BIM technology, the company continues to promote digital transformation, accelerate the development and iteration of artificial intelligence technology, expand the application scenarios of AI design, and accelerate the integration of AI technology with the entire design process.

Risk warning: Macroeconomic policies are tightening beyond expectations, overseas business operation risks, etc.