After excluding Macalline's restructuring earnings in 24Q3, the results were -15% YoY and +44% Month-on-Month, in line with expectations. The company released its 2024 three-quarter report, 2024Q1-Q3. The company achieved revenue of 502.14 billion yuan, -16.1%; net profit to mother of 2.06 billion yuan, -83.4% year over year; net profit after deduction of 1.32 billion yuan, or -39.3% year on year; and earnings per share of 0.57 yuan, or -85.8% year over year.

By business, revenue from the Supply Chain Operations Division and Real Estate Division decreased by -22.2% and +26.0%, respectively; net profit to mother decreased by 7.43 billion yuan year-on-year, and by segment, 1) Net profit from the Supply Chain Operations segment was 2.24 billion yuan, a year-on-year decrease of 0.25 billion yuan; 2) Net profit from the real estate business segment was 0.38 billion yuan, a year-on-year decrease of 0.09 billion yuan. Among them, C&D Real Estate and MediaTek Group each contributed 0.66 billion yuan to performance , -0.37 billion yuan, and investment income of 0.09 billion yuan was obtained from the sale of part of the shares; 3) Net profit from the home furnishing shopping business segment was -0.57 billion yuan, a year-on-year decrease of 0.53 billion yuan; in addition, the company's 23Q3 acquisition of Macalline confirmed restructuring revenue of 9.59 billion yuan, while 24Q3 did not have this item. Looking at a single quarter, in 24Q3, the company achieved revenue of 183.1 billion yuan, -14.9%; net profit to mother was 0.86 billion yuan, -91.8% YoY, +44.4% YoY if the impact of Macalline's restructuring revenue was excluded. 2024Q1-Q3, the company's comprehensive gross profit margin was 4.4%, +1.3 pct year on year; period rate 2.6%, year on year +0.9 pct; net profit margin 0.5%, year on year -2.0pct. In addition, the company's investment income was 1.07 billion yuan, +110% year over year; fair value change income - -1.48 billion yuan, continuing year-on-year losses; asset and credit impairment losses were 2.79 billion yuan, +375% year over year. By the end of 24Q3, advance payments (including contract liabilities) were 239.6 billion yuan, -24% year over year.

Real estate: Settlement margins are declining, and sales rankings continue to rise. The company announced that 2024Q1-Q3's real estate division revenue was 81.37 billion yuan, +26.0% year on year; net profit 2.44 billion yuan, -21.2% year on year; net profit to mother 0.38 billion yuan, -19.0% year on year; real estate division gross profit margin 12.4%, -1.2 pct year on year; net profit margin 3.0%, -1.8 pct year on year. According to Kerui, 2024Q1-Q3 achieved sales volume of 104.4 billion yuan, 41% year over year; of these, C&D Real Estate sales amount was 85.3 billion yuan, -36% year over year. C&D Real Estate ranked 7th in the country in sales, an increase of 1 place over the previous year. By the end of 24H1, the company's land storage scale was 20.86 million square meters, corresponding to a value of 333.1 billion yuan, -7% and -6%, respectively. The value of the company's equity land reserves (unsold) in Tier 1 and 2 cities accounted for about 77%, an increase of 3.3 pct over the end of '23.

Supply chain: 2024Q1-Q3 revenue -22% YoY, performance -10% YoY. The company announced that the 2024Q1-Q3 supply chain division's revenue was 414.7 billion yuan, -22% YoY, net profit 2.27 billion yuan, -9% YoY; net profit to mother was 2.24 billion yuan, -10% YoY. Supply chain segment gross profit margin 2.0%, net profit margin 0.5%, +0.3pct, +0.1pct year over year. The company's supply chain business continues to deepen its specialized and international business strategy, focusing on core categories and customer needs.

Investment analysis: Performance declined, sales rankings continued to grow, and “buy” ratings were maintained. As a state-owned enterprise in Xiamen, C&D Co., Ltd. is mainly engaged in supply chain operations and real estate, with positive operating performance and impressive dividends. Considering that the real estate division MediaTek Group and the furniture store Macalline are still under loss pressure, we lowered our 24-26 net profit forecast to the mother to 3.22, 4.03, and 4.2 billion yuan (the original values were 3.83, 4.07, 4.25 billion yuan). The corresponding 24/25PE is only 8.6X/6.8X, while the two major businesses of the company are currently located, Shenwan Transportation and Shenwan Real Estate are respectively 14.5X/ 23.0X. Currently, the company's valuation is still attractive. Currently, the dividend rate (ttm) is as high as 7.6%, maintaining a “buy” rating.

Risk warning: Sales in the real estate industry fell beyond expectations. The company received a warning letter from the Xiamen Securities Regulatory Bureau, and the company's relevant personnel received regulatory discussions and decisions on measures.