Net profit rose sharply as a result of the increase in restructuring proceeds. In 2023, the company achieved operating income of 763.678 billion yuan, -8.30% year-on-year; net profit to mother was 13.104 billion yuan, +108.83% year-on-year, mainly due to restructuring revenue of 9.522 billion yuan generated by completing the acquisition of Macalline's control in August 2023 and including it in the company's consolidated statements. Specifically, the company's supply chain operations and real estate business contributed 3,953 million yuan and 191 million yuan to net profit, respectively, -1.38% and -91.56% year-on-year, respectively. Net profit from the home furnishing mall business (September-December) was -563 million yuan. By the end of 2023, the company's total assets reached 820.852 billion yuan, net assets reached 224.639 billion yuan, and net assets attributable to owners of the parent company reached 69.511 billion yuan. The company's total dividend amount in 2023 was 2.03 billion yuan, accounting for 67.88% of net profit attributable to mother after excluding the restructuring proceeds and interest on perpetual bonds. Compared with the share of cash dividends in '22, the proportion of net profit attributable to mother after excluding interest on perpetual bonds was 26.23 percentage points higher.

Supply chain: Adhere to professional development and actively integrate into domestic and foreign markets. In 2023, the company's supply chain operation business achieved revenue of 593.366 billion yuan, -14.79% year-on-year, mainly due to sharp fluctuations in commodity prices. During the year, the company continued to strengthen its ability to obtain resources and continue to deepen cooperation with major customers. For example, the volume of cooperation between C&D Steel Group and major state-owned listed and large-scale private steel mills increased by more than 23%, and the volume of cooperation with major iron ore suppliers such as international mines increased by nearly 55%. On the other hand, the company integrated into domestic and foreign markets through a “double cycle” and “walk in”. The import and export volume and international business reached US$43.8 billion in 23 years, +8.38% over the same period last year. Domestically, the company is deeply involved in the domestic East China and South China markets, with procurement from suppliers in the Midwest and sales volume of over 200 billion yuan, up about 8% year on year; on the international side, the scale of trade between the company and APEC countries exceeded 29 billion US dollars, up more than 9% year on year; trade scale with countries along the “Belt and Road” was nearly 17 billion US dollars, up more than 16% year on year; and the scale of trade with PRCEP member countries exceeded 15 billion US dollars, an increase of more than 10% year on year.

Real estate: Promote elimination and efficient repayment, and maintain investment strength. In 2023, the company's real estate business achieved revenue of 166.45 billion yuan, +21.94% year over year; full-caliber contract sales amount of 229.479 billion yuan, +9.42% year over year; full-caliber sales repayment of 227.455 billion yuan; repayment ratio of about 99%, which has remained high for many years. On the other hand, the company adheres to a steady investment strategy, focusing on high-energy cities and high-quality locations. The total amount of full-caliber land acquisition was about 132,028 billion yuan during the year. Of these, first-tier and second-tier cities accounted for more than 90% of the land acquisition amount, and the full caliber value of the new land plots was about 255.302 billion yuan. By the end of 2023, the company's full-caliber land reserves (unsold caliber) accounted for about 73.57% of the value of goods in Tier 1 and 2 cities, an increase of 5.48 percentage points over the end of '22.

Investment advice: Maintain an “better than the market” rating. Considering that the core categories of the company's supply chain business remain ahead, land storage in the real estate business continues to be optimized, and the furniture store operation business goes hand in hand with the real estate business, we predict that the company's EPS in 2024 will be 2.10 yuan, giving the company 7-8 times PE valuation in 2024. The corresponding market value range is 441-50.4 billion yuan, and the corresponding reasonable value range is 14.69-16.79 yuan per share. Risk warning: Market recovery falls short of expectations.