Performance summary: In 2023, the company achieved operating income of 72.15 billion yuan, a year-on-year increase of 19.4%; net profit of 3.47 billion yuan, a year-on-year decrease of 29.0%; and net profit to mother of 1.84 billion yuan, a year-on-year decrease of 29.6%. The company plans to pay a cash dividend of 3.7 yuan (tax included) for every 10 shares, with a dividend ratio of 55.4% and a dividend rate of about 6%.

Sales are steady, ranking is rising, and land reserves are sufficient. In 2023, it achieved sales of 126 billion yuan, an increase of 4.8% over the previous year, and remained stable in the 100 billion camp for 4 consecutive years. Kerry's sales ranking rose to 14th place, up 4 places from the previous year. The company adjusted and optimized the organizational structure framework and formed a “3+1" business layout. The East China region/South China/Zhuhai region/Northern region accounted for 55.0%/24.6%/15.2%/5.2%, respectively. The East China region lays the foundation for the company's sales. The South China region's sales indicators have increased significantly, and the company has stabilized its leading position in Zhuhai. The company focused on sales repayment and achieved a repayment amount of 84.69 billion yuan, an increase of 17.2% over the previous year. The return of capital remained steady. At the end of the period, the advance payment for the building was RMB 10.82 billion, an increase of 15.7% over the beginning of the year, and there are plenty of resources to be settled. The company obtained 23 high-quality projects through public auctions, strategic mergers and acquisitions, equity cooperation, etc., focusing on first-tier and second-tier cities. During the period, the company started a new construction area of 2,048,000 square meters and completed an area of 5.149,000 square meters. By the end of the period, the company had a land storage floor area of 4.34 million square meters and an area under construction of 11.891 million square meters.

The three major supports in the commercial sector are strengthening and improving, and diversified businesses are being effectively expanded. Focusing on the main line of serving the residential sector, the company continues to strengthen and improve the “three major supports” of commerce, property, and upstream and downstream industries. At the end of the period, shopping centers and shopping streets had a rental area of 433,000 square meters, with rental income of 480 million yuan; office buildings and other rental space of 472,000 square meters, with rental income of 200 million yuan. Upstream and downstream industrial chains and overseas companies have improved quality and efficiency, marketing companies have exceeded key business indicators, updated the company continued to promote key projects and made some progress, the design company completed 69 patent applications, Huashi China Construction Macau's market share exceeded 30%, and Youlife expanded to 19 stores, effectively expanding the market.

Finance continues to be stable, and financing channels are being developed at an accelerated pace. The company adheres to the bottom line of risk, continues to stay in the green zone, and continues to broaden channels, consolidate basic markets, and innovate financing methods to revitalize assets and optimize the financing structure. The overall average financing cost at the end of the period fell to 5.48%, and the first rental housing pre-reits project and sub-share resale of similar reits were implemented one after another; actively carried out equity financing, successfully completed the issuance of shares to specific targets, and raised more than 5.1 billion yuan in capital.

Profit forecasting and investment advice. The compounded growth rate of the company's net profit to mother in 2024-2026 is expected to be 6.9%. Considering the company's financial health, sales and land acquisition showed a contrarian increase, and diversified businesses collaborated to develop steadily. The company was given 0.7 times PB and a target price of 7.28 yuan, maintaining a “buy” rating.

Risk warning: Risks such as completion and delivery falling short of expectations, sales and repayment falling short of expectations, and policy easing falling short of expectations.