Core views:

The annual dividend payout ratio is 104%. The company released its annual report. The company's revenue in '23 was 3.95 billion yuan, +14.9% year-on-year, net profit to mother was 1.26 billion yuan, +12.8% year-on-year, after deducting net profit of non-return to mother of 1.25 billion yuan, +24.0% year-on-year. The annual dividend is 1.31 billion yuan, with a dividend payout ratio of 104%. The current dividend rate is 5.4%, and the dividend ratio is at a high level.

Office occupancy rates declined in the fourth quarter. The occupancy rate of office buildings in 23 was 95.8%, down 0.5 pct from '22, but office rental income increased slightly by 1.6% due to a 1.9% increase in rent efficiency during the period. Looking at quarterly performance, the occupancy rate declined quarterly since Q3 in '23, and the occupancy rate fell by nearly 0.2 pct in the fourth quarter; office rent efficiency was 646/643/644/639 yuan/square meter/month. Although the occupancy rate decreased by 0.1 pct in the third quarter, rent efficiency was slightly higher than in the second quarter, and the fourth quarter showed a decline in both floor efficiency and occupancy rate.

Shopping mall floor efficiency and occupancy rates both declined in the fourth quarter. The mall's occupancy rate in '23 was 98.2%, down 0.6 pct from '22. However, due to the 10.3% increase in overall shopping mall rent efficiency during the period, the mall's rental income increased 9.6%. Looking at quarterly performance, occupancy rates increased in the second quarter, floor efficiency decreased slightly, and occupancy rates declined slightly in the third quarter, but both occupancy rates and floor efficiency declined in the fourth quarter. The rental rate of shopping malls in the fourth quarter fell 0.4 pct from the third quarter, and rent efficiency fell 1.2% from the third quarter.

The rental rate of the apartment sector continues to rise. The occupancy rate of apartments in '23 was 85.9%, up 12.6% from '22, and the floor efficiency decreased slightly by 1.6%. The combination led to an increase of 15.6% year-on-year in overall apartment rental income.

The condominium business underwent a transformation in '19, re-entered the market in '20, and the rental rate has been climbing quarterly since 20 years. Historically, the apartment occupancy rate was as high as 93%. Currently, there is still room to climb the slope at higher levels of occupancy rates.

Profit forecasting and investment advice. The company uses the ITC project as the main operating body. Locations are scarce, endogenous efficiency is growing steadily, and performance is stable. The company's net profit for 24-25 is expected to be 12.8/1.29 billion yuan, +1.6%/+1.1% year-on-year. The company was given a 24-year PE = 22X, with a reasonable value of 27.96 yuan/share per share, maintaining a “buy” rating.

Risk warning. Macroeconomic policies fell short of expectations, rent collection rates declined, occupancy rates declined, etc.