Key points of investment:

The company has withdrawn its allotment application. Currently, it has sufficient capital and smooth financing, which is conducive to balancing shareholders' interests. The company issued an announcement, and the board of directors reviewed and passed the “Proposal on the Company's Termination of Shares Placing Shares to the Original Shareholders and Withdrawal of Application Documents”. In view of changes in the internal and external environment, combined with factors such as the company's internal situation and development plans, after thorough discussion and careful study by all parties concerned, the company decided to terminate the current placement of shares to the original shareholders and withdraw the application documents. We believe that, on the one hand, the company's leverage ratio is manageable and the capital on hand is still abundant; as of the end of 24Q3, the company's monetary capital was 91.4 billion yuan, or -5.0%; the company's balance ratio after excluding advance payments was 64% and the net debt ratio was 31%; on the other hand, financing costs for the company's real estate subsidiary at the end of 24H1 were 3.57-4.25%; on the other hand, the financing environment in the real estate industry continues to relax, and the channels for equity financing methods other than allotments are already relatively smooth; compared with equity financing methods such as allotments and fixed increases, the company's valuation repair and balance Shareholders' interests, especially the interests of small and medium shareholders.

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 opinion: Withdrawing the allotment application favors the restoration of the company's valuation, taking into account shareholders' interests, and maintaining the “buy” rating.

As a state-owned enterprise in Xiamen, C&D Co., Ltd. is mainly engaged in the two major businesses of supply chain operations and real estate. Our net profit forecast for 24-26 is 3.22, 4.03, and 4.2 billion yuan, corresponding to 24/25PE, which is only 8.8X/7.0X. Currently, the company's valuation is still attractive. Currently, the dividend rate (ttm) is as high as 7.5%, 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.