Introduction to this report:

In 2023, the company's revenue and net profit declined year-on-year, and the performance was temporarily under pressure. Among them, the scale of land concessions for the main business development and operation of the park fell short of expectations; the accelerated layout of the green power business was awaiting harvest, and production investment accurately focused and empowered the park.

Key points of investment:

The company's 2023 park development and operation are temporarily under pressure. The green power business is waiting to be reaped, industrial investment continues to gain strength, and the rating of increasing holdings is maintained. In 2023, the company's revenue was 3.66 billion yuan, and net profit to mother was 1.36 billion yuan, down 22.9% and 15.3% year-on-year respectively. The net profit margin was 37.3%, and it is planned to pay 2.73 yuan for every 10 shares. The 2024-2025 EPS was adjusted to 0.92/0.99 yuan (originally 1.57/1.86 yuan), and the 2026 EPS was added to 1.06 yuan. Referring to the industry average and taking into account the “two wings” business trend, the company was given 12.5XPE, the target price was lowered to 11.55 yuan, and the shareholding rating was maintained.

The land concession area for the park's development and operation business was reduced, and performance fluctuated. The scale of the company's land concessions declined in 2023, and sector revenue was -26.3% year-on-year, which is related to the overall cooling of the land market in non-core cities. Due to the high development costs of some related projects, gross margin fell 6.3pct to 58.4% year on year, and the overall level is still high. Furthermore, the net profits of the subsidiaries Sino-Singapore Suyu and Sino-Singapore Jiashan, which mainly focus on first-level land development and operation, were -93.0% and -98.7%, respectively.

Strengthening the “two wings”, the scale of green power grid connection increased by 356% year on year, and the industrial investment business boosted 66.4 billion yuan of investment. 1) The green power business uses Sino-Singapore Green Energy as the platform, with distributed photovoltaics as the main focus. At the end of 2023, participating companies completed a total of 474 MW connected to the grid, completed 23.7% of the 2025 target of 2 GW, and another 211 MW under construction. 2) At the end of 2023, the company pledged to invest in 47 external market-based funds and 36 direct investment projects, driving investment of 60.5 billion yuan and 5.86 billion yuan respectively, and its strong investment capacity can also bring considerable investment returns.

Financing costs are advantageous, and there is plenty of room for leverage. The company issued the second installment of 1 billion yuan bonds, with a coupon interest rate of 2.9% and low capital costs; the balance ratio in 2023 was only 45.5%.

Risk warning: The development progress of the park is lower than expected, and the development of green power and industrial investment is lower than expected