Core views

In 2023, the company achieved revenue of 763.7 billion yuan, a year-on-year decrease of 8.3%, and achieved net profit of 13.1 billion yuan, an increase of 109% over the previous year. The high increase in performance was mainly due to merging Red Star Macalline to generate restructuring revenue of 9.5 billion yuan. Comparable net profit of 4.15 billion yuan was 4.15 billion yuan, down 34.0% year on year, mainly due to the fact that MediaTek contributed 1.86 billion yuan to the company's net profit to mother, a decrease of 2.05 billion yuan from the previous year. In 2023, the company achieved sales volume of 229.5 billion yuan, a year-on-year increase of 9.4%, a land acquisition amount of 132 billion yuan, and a land acquisition intensity of 57.5%, an increase of 8.4 percentage points over the previous year. High-quality soil storage fully guarantees the steady growth of future sales. The company plans to pay a dividend of 210 billion yuan, accounting for 58.7% of net profit returned to mother after excluding restructuring proceeds. Based on the closing price of April 16, 2024, the company's dividend rate reached 6.7%, with significant investment value.

occurrences

The company released its 2023 annual report. In 2023, it achieved revenue of 763.7 billion yuan, a year-on-year decrease of 8.3%, and realized net profit of 13.1 billion yuan to mother, an increase of 109% over the previous year.

Brief review

Performance growth is in line with expectations. In 2023, the company achieved revenue of 763.7 billion yuan, a year-on-year decrease of 8.3%, and achieved net profit of 13.1 billion yuan, an increase of 109% over the previous year. The company's performance was in line with previous performance forecasts. The high increase in the company's performance was mainly due to the merger of Red Star Macalline to generate restructuring revenue of 9.5 billion yuan, which had no cash inflow. Excluding the restructuring proceeds and Red Star Macalline's operating profit and loss in September-December, the comparable net profit was 4.15 billion yuan, a year-on-year decrease of 34.0%. By segment, the supply chain business achieved net profit of 3.95 billion yuan, a year-on-year decrease of 1.4%. Despite sharp fluctuations in commodity prices, the company achieved steady performance; the real estate business achieved net profit of 190 million yuan, a year-on-year decrease of 91.6%, mainly due to MediaTek's contribution to the company's net profit of 1.86 billion yuan, a decrease of 2.05 billion yuan from the previous year.

The real estate business achieved high-quality growth. In 2023, the company achieved sales volume of 229.5 billion yuan, an increase of 9.4% over the previous year, and achieved a repayment of 2275 billion yuan, with a repayment ratio of 99%.

The company accounts for 83% of sales in Tier 1 and 2 cities. The Hangzhou Zhijiang Future Community Project achieved annual sales volume of 17.7 billion yuan and a sales area of 450,000 square meters, all ranking first in the country, demonstrating the company's operational strength. The amount of land acquired by the company in 2023 was 132 billion yuan, and the intensity of land acquisition was 57.5%, an increase of 8.4 percentage points over the previous year. Tier 1 and 2 cities accounted for more than 90% of land acquisition.

By the end of 2023, the company had a land reserve of 22.33 million square meters, corresponding to a value of 261.8 billion yuan, of which Tier 1 and 2 accounted for 73.6%. High-quality soil storage fully guarantees the steady growth of future sales.

Optimize the structure of the supply chain operation business and accelerate the international layout. The company continues to deepen its original business areas such as steel, pulp and paper, agricultural products, etc., while strengthening the consumer sector layout. In 2023, the company achieved a trade scale of over 54 billion yuan in the consumer goods industry, an increase of about 25% over the previous year. At the same time, the company actively integrated into the international market. Import and export and international business reached US$43.8 billion in 2023, an increase of 8.4% over the previous year.

Actively pay dividends to repay shareholders. The company plans to pay a dividend of 210 billion yuan in 2023, accounting for 58.7% of net profit returned to mother after excluding restructuring proceeds, an increase of 20.4 percentage points over the previous year. Based on the closing price of April 16, 2024, the company's dividend rate reached 6.7%, making the investment worth significant. Including this dividend, the company has accumulated cash dividends of 9.16 billion yuan over the past five years, and a cumulative cash dividend of 16.98 billion yuan after listing, positively returning shareholders.

Keep the purchase rating and target price of $19.75 unchanged. We forecast the company's 2024-2026 EPS to be 2.26/2.59/3.02 yuan, maintaining the purchase rating and target price of 19.75 yuan unchanged.

Risk warning: 1) The business model of the company's supply chain operation business model is to charge a fixed fee based on product turnover and according to a certain percentage. Since 2022, commodity prices have declined, and the company's revenue scale and profitability may be impacted. The company is actively expanding the supply chain business categories and regions, but new categories and regions need to be cultivated, and the process is at risk. Furthermore, overseas business is an important component of the company's supply chain business. Currently, major overseas economies are facing recession, and the Russian-Ukrainian war has also brought geopolitical risks, all of which may have an impact on the company's business. 2) The real estate business segment of the company is operated by two entities, C&D Real Estate and MediaTek Group. MediaTek Group has large inventories in third- and fourth-tier cities, or is a drag on the company's sales. In addition, the current inflection point of real estate sales is at present. Although C&D Real Estate is located in the core area of the core city and has achieved excellent sales results in the past, this does not represent the future; 3) The Xiamen Securities Regulatory Bureau issued a warning letter on C&D's accounting and internal control issues. We need to pay attention to related risks.