Incident: The company released its 2024 three-quarter report. The company achieved operating income of 12.16 billion yuan in the first three quarters of 2024, up 12.01% year on year; net profit to mother 0.62 billion yuan, up 4.19% year on year; basic earnings per share were 0.59 yuan/share, up 4.19% year on year.

Revenue achieved double-digit growth: the company achieved revenue of 12.16 billion yuan in the first three quarters of 2024, up 12.01% year on year, and net profit to mother 0.62 billion yuan, up 4.19% year on year. The reasons for the growth rate of net profit to mother were lower than revenue: 1) gross margin declined slightly, with gross margin of 11.31% in the first three quarters of 2024, down 1.35 pct from the same period last year; 2) achieving other income of 0.034 billion yuan in the first three quarters, down 30.90% from the same period last year, mainly due to declining value-added tax input tax addition and reduced government subsidies; 3) loss of 0.01 billion yuan from changes in fair value, mainly due to the sale of investment real estate. Looking at cost control, the company's sales expense ratio and management expense ratio for the first three quarters of 2024 were 0.46% and 2.83% respectively, down 0.12 pct and 0.58 pct respectively from the same period last year. The management effect was obvious.

The business format focuses on diversified layout: the company's property management business operated steadily in the first three quarters of 2024. By the end of the third quarter of 2024, the company had 2,252 property projects under management, with a management area of 0.401 billion square meters, an increase of 4.16% over the end of the first half of 2024. A new annual contract of 2.909 billion yuan was signed in the third quarter, and Market Development maintained steady growth.

The amount of new annual contracts signed in the residential sector increased 79% year-on-year in the first three quarters; the non-residential sector continued to expand, deepening advantage tracks such as offices, parks, and government, winning bids for 10 million projects such as Guizhou Qianyuan Electric Power, Chengdu Taihang Laboratory, the Fifth Affiliated Hospital of Guangzhou Medical University, and the Shenzhen Poyang Lake Science and Technology Park project.

Strong operating capacity in the asset management business: As of the end of September 2024, the company had 71 commercial projects under management (including preparation projects), with a management area of 4.02 million square meters, including 3 self-owned projects, 58 investment promotion Shekou projects, and 10 third-party brand export projects. The management area increased by 1.26% compared to the end of the first half of 2024, and the management area increased by 1.26%, including 1 third-party brand development project. In terms of operation of owned properties, the occupancy rate as of the end of the third quarter of 2024 was 95%. Compared to the end of the first half of the year, the 1pct value-added service is progressing steadily: 1) The home delivery service and rental and sales business continue to expand the depth of business, and the service coverage rate has increased significantly. 2) Multi-channel access to the charging pile business, and the number of charging stations and charging capacity have increased dramatically. 3) Community Health Business actively explores the “Property+Wellness” innovation model and implements pilot projects.

The share repurchase shows confidence: The company plans to use its own funds or self-raised funds to repurchase shares through pooled bidding, demonstrating confidence in the company's future development.

Investment advice: The company's revenue and net profit to mother increased in the first three quarters of 2024. The property management business has grown steadily, and the business format has achieved a diversified layout; the management scale of the asset management business has expanded, demonstrating the company's strong operating ability.

According to the three-quarter report, we maintain the forecast of the company's 2024-2026 net profit of 0.807 billion yuan, 0.909 billion yuan, and 0.97 billion yuan. The corresponding EPS is 0.76 yuan/share, 0.86 yuan/share, 0.92 yuan/share, and the corresponding PE is 15.19X, 13.48X, and 12.63X, maintaining the “recommended” rating.

Risk warning: the risk that the macroeconomy falls short of expectations, the risk that the expansion of basic property management services falls short of expectations, the risk that related parties' related businesses fall short of expectations, the risk that asset management business operations fall short of expectations, and the risk that value-added services fall short of expectations.