Real estate business revenue grew, and the two main business operations collaborated to maintain the “buy” rating and released the 2024 third quarter report. In January-September, C&D achieved operating income of 502.136 billion yuan, a year-on-year decrease of 16.13%, and realized net profit to mother of 2.058 billion yuan, a year-on-year decrease of 83.43%, resulting in net profit not deducted from mother of 1.32 billion yuan, a year-on-year decrease of 39.30%. The overall business situation of the company is steady, and the two main business operations are in synergy. We maintain our profit forecast. We expect net profit to be 5.05, 6.43, and 7.8 billion yuan for 2024-2026, and EPS of 1.7, 2.1, and 2.6 yuan respectively. The current stock price corresponds to PE valuations of 5.6, 4.4, and 3.6 times, respectively. The company's diverse businesses are developing collaboratively, and the business performance is expected to improve in the long term, maintaining a “buy” rating.

The scale of revenue from the real estate business expanded, and the supply chain business contracted. From January to September 2024, the company's supply chain business achieved revenue of 414.665 billion yuan, a year-on-year decrease of 22.22%, and realized net profit of 2.244 billion yuan, a year-on-year decrease of 10.20%; the real estate business achieved revenue of 81.366 billion yuan, an increase of 26.03% year-on-year, and achieved net profit of 0.381 billion yuan, a year-on-year decrease of 19.04%. The decline in net profit from the supply chain business was mainly due to commodity price fluctuations and the weakness of the traditional automobile industry. Profits from the company's commodity collection and distribution business and automobile sales business declined from the same period of the previous year; the decline in net profit from the real estate business was mainly due to: (1) the subsidiary C&D Real Estate calculated an inventory price reduction preparation of 0.665 billion yuan based on the principle of prudence; (2) the subsidiary Lianfa Group calculated inventory price reduction preparations of 0.664 billion yuan according to the principle of prudence, contributing -0.373 billion yuan to the company's consolidated net profit , a year-on-year decrease of 0.285 billion yuan. The company's gross profit margin for the first three quarters was 4.37%, +1.32pct year on year, net profit margin 0.53%, and -1.98pct year on year.

The rental rate of furniture stores declined in stages. Macalline also showed that from January to September 2024, the net profit from the company's home furnishing store operation was -0.567 billion yuan, mainly due to the phased decline in the rental rate of Macallon shopping malls. In order to support the continued operation of merchants, Macalline's operating income and profit decreased year-on-year due to factors such as increased business stabilization and retention concessions to merchants; at the same time, due to increased losses due to changes in the fair value of investment real estate, Macalline's “net profit to mother” was -1.911 billion yuan, which combined led to Macalline's “net profit to mother” of -1.911 billion yuan. For C&D The net profit contributed to the consolidated stock report was -0.567 billion yuan.

Risk warning: Commodity operations fall short of expectations, and the recovery of the real estate industry falls short of expectations.