High dividends guarantee high dividends. In '23, the company achieved operating income of 763.7 billion yuan, -8% year-on-year; net profit to mother of 13.1 billion yuan, +109% year-on-year (net profit of 3,582 billion yuan excluding restructuring revenue); net profit of 2.4 billion yuan, or -35% year-on-year. The annual dividend is 2.1 billion yuan, with a dividend ratio of 58.71% (net profit to mother after excluding restructuring proceeds); the dividend per share is 7 gross, corresponding to a dividend rate of 6.7%, and the dividend ratio is cost-effective.

The growth rate of the supply chain business broadened in the fourth quarter. In '23, the supply chain business achieved revenue of 593.4 billion yuan, -15% year-on-year, of which Q1, Q2, Q3, and Q4 revenue was 161.6 billion yuan, 188.9 billion yuan, 182.6 billion yuan, and 60.2 billion yuan, respectively, +13%, -4%, and -64% year-on-year respectively. Supply chain revenue declined sharply in the fourth quarter. Net profit from the supply chain in '23 was 3.95 billion yuan, or -2% year-on-year, of which Q1, Q2, Q3, and Q4 were 850 million yuan, 8.3 billion yuan, and 1.45 billion yuan, respectively, -8%, -29%, -10%, and +45% year-on-year respectively. The supply chain performance in the fourth quarter increased sharply, and the performance was far better than expected.

Depreciation has dragged down the overall performance of the real estate sector. In '23, the real estate business achieved operating income of 166.5 billion yuan, +22% year-on-year, and net profit to mother of 191 million yuan, -92% year-on-year. Among them, the Q4 real estate business had net profit of -280 million yuan, and quarterly losses. Looking at the split platform, C&D Real Estate contributed 2.05 billion yuan; MediaTek contributed 1,888 billion yuan. The poor performance of the real estate industry was mainly affected by impairment (1), with an overall impairment of 2.93 billion yuan, of which MediaTek lost 1.48 billion yuan and C&D real estate depreciated 1.45 billion yuan; (2) carry-over projects were mainly low gross profit and low energy grade projects. The gross margin level was low, with a gross profit margin of 11.5% for 23 years, a decrease of 3.1 pct from '22.

Profit forecasting and investment advice. The company's overall operation is steady, the will to invest is strong, and the investment strategy is more focused. The net profit for 24-25 is expected to be 5.517 billion yuan and 6.273 billion yuan, respectively, compared with -57.9% (+54% growth rate after restructuring revenue) and +13.7%, respectively. According to the segment valuation, the real estate business was given 8XPE for 24 years and 1XPB for 24 years for the supply chain business, giving the company a reasonable value of 14.98 yuan/share per share, maintaining a “buy” rating.

Risk warning. Supply chain business risk, sales falling short of expectations or policy regulation, overseas risk.