Incidents. The company published its 2023 annual report. In 2023, the company achieved operating income of 4.727 billion yuan, an increase of 5.45% year on year; net profit to mother was 1,560 billion yuan, a year-on-year decrease of 35.06%. The company's 2023 profit distribution plan is to distribute a cash dividend of 2.8 yuan (tax included) for every 10 shares to all shareholders.

Deeply involved in the Nanjing area, the share of affordable housing sales is high. 1) In 2023, the company's real estate business achieved a contract sales area of 254,600 square meters (31,300 square meters for commercial housing projects and 223,300 square meters for affordable housing projects), an increase of 48.51% over the previous year; achieved contract sales of 1,914 billion yuan (1,070 million yuan for commercial housing, parking spaces, etc., and 844 million yuan for affordable housing projects), an increase of 63.18% over the previous year. The new construction area was 269,500 square meters, an increase of 208.71% over the previous year. The completed area was 344,600 square meters, an increase of 8.54% over the previous year. Real estate development and sales business revenue of 3,503 billion yuan (carry-over revenue from commercial housing projects is 94.385 million yuan, affordable housing project carry-over revenue of 3.330 million yuan, and commissioned construction project carry-over revenue of 79.234 million yuan), a year-on-year decrease of 3.93%. 2) The company won new bids for projects such as general contracting for commercial housing projects on the NO.202G34 plot and general contracting for sewage treatment plant upgrading technology transformation projects, etc., with a total contract amount of 1.38 billion yuan. In 2023, the company's municipal business achieved revenue of 1,223 billion yuan, an increase of 46.42% over the previous year.

Improve the investment layout and promote rolling investment. 1) In 2023, the company focused on biomedicine, information technology, semiconductors, etc., and invested in 7 additional projects, including Manson Biotech, Hanxin Pharmaceuticals, Caring Healthcare, Jiayue Intelligence, Agar, Silicon Semiconductors, and electrical energy storage, and made additional investments in Nutrite. 2) The company took the opportunity to reduce some of its shares in Jinpu Garden and successfully transferred the remaining 49% of Chengong Pharmaceutical's shares.

3) In the company's investment project, Haina Pharmaceutical's GEM listing application has been inquired, and Yimai Sunshine has completed the Hong Kong Stock Exchange listing registration. 4) Achieved annual investment income of 1,965 billion yuan, a year-on-year decrease of 18.32%; realized fair value change income of 141 million yuan.

Debt levels are low, and financing costs continue to decline. At the end of 2023, the company's balance ratio remained low at 50.24%; at the end of the period, the company's total interest-bearing debt was 9.849 billion yuan, accounting for 26.42% of total assets.

In 2023, the average cost of financing a company was 2.99%, down 0.22 percentage points from 2022.

In 2024, the company plans to start a new construction area of 51,600 square meters (Yanqidu), which is estimated to be 80.85% less than the actual new construction area in 2023; the planned completion area is 303,600 square meters (mainly Pinyuan, Xingyuan, and Jingyuan), which is expected to reduce the actual completed area by 11.90% compared to 2023.

The reasonable value range is 6.12-7.14 yuan, with an “superior to the market” rating. We expect the company's 2024 and 2025 EPS to be 1.02 yuan and 1.12 yuan respectively. The company was given 6-7 times dynamic PE in 2024, with a corresponding reasonable value range of 6.12-7.14 yuan, maintaining the company's “superior to the market” rating.

Risk warning: The company faces the risk of interest rate hikes and policy regulation, as well as the risk of unsuccessful transformation.