With the continuous heating up of the A-share and Hong Kong stock market bull market expectations, investors' enthusiasm for the capital markets is being continuously rekindled, and trading activity has significantly increased.

After experiencing rapid growth earlier, market fluctuations and differentiation are inevitable, making investors pay more attention to fundamental analysis of companies to identify opportunities with investment value certainty. In this context, financial reports have become a key tool for all parties in the market to explore potential investment opportunities.

Recently, Guangdong Investment released its third quarter report, demonstrating its comprehensive strength in many aspects, which not only supports the continuous realization of shareholder returns, but also indicates that the company may usher in a new revaluation of its value.

1. The business fundamentals are solid, and the long-term operational strength is validated.

Looking at this latest report card, Guangdong Investment continues to demonstrate a steady and stable approach.

In the first three quarters, the company achieved a comprehensive income of 18.142 billion Hong Kong dollars, a year-on-year increase of 10.4%, and a net profit attributable to shareholders of 3.593 billion Hong Kong dollars.

From a macro perspective, in the face of lingering market pressures, Guangdong Investment can be said to have maintained a fairly robust operation. Meanwhile, looking at the details of the business sectors, it also presents a series of noteworthy aspects.

Firstly, the core business water resources sector.

In the first three quarters, the tax profit of the core Dongshen Water Supply Project reached 3.461 billion Hong Kong dollars, an increase of 3.8% year-on-year; the tax profit of other water resource projects reached 1.644 billion Hong Kong dollars, maintaining steady growth.

As the main contributor to performance, the water resource project is a sector with certain expected returns for Guangdong Investment, which can also be seen from its continuously expanding business scale.

Especially with policy support, it provides a long-term stable growth environment for this business. It can be said that the steady performance of the water resource business has established a stable source of income and provided a stable cash flow, highlighting the continuous quality asset attributes.

(Source: Company Overview)

Next is the property rental and property development sector, where Guangdong Investment's another 'cash cow' business is located.

In terms of property rental, the company owns multiple core area property investment projects in mainland China and Hong Kong, continuously unlocking performance potential.

In the first three quarters, benefiting from the increase in average rental levels and partial improvement in property rental rates, coupled with the stimulus from the newly opened Yuehai Tianti project, the property investment business income of its Yuehai Tianhe City increased by 8.3% year-on-year, reaching 1.204 billion Hong Kong dollars. At the same time, the tax profit (excluding changes in fair value of investment properties and net interest income) increased by 14.2% year-on-year to 0.689 billion Hong Kong dollars.

In terms of property development, in the first three quarters, its subsidiary gd land achieved revenue of 4.043 billion Hong Kong dollars, a significant increase of 207.5% year-on-year. Considering the complex situation still facing the entire real estate market throughout the year, this performance is indeed impressive.

Data also shows that in the first three quarters, gd land's project sales speed has further accelerated, with a signed and delivered total floor area of approximately 0.212 million square meters and 0.21 million square meters, respectively. Compared to 2023 figures of 0.209 million square meters and 101,000 square meters, they both show good growth. Although there is still some pressure on the profit side, it is obvious that the real estate development business has most likely entered the performance turning point phase.

Lastly, in other business aspects, each has shown its own performance, contributing diverse performance growth to the company.

Among them, guangdong inv achieved revenue of 1.216 billion Hong Kong dollars, with a significant increase of 37% in pre-tax profit (excluding net financial expenses) to 0.122 billion Hong Kong dollars. The overall revenue from hotel ownership, operation, and management business reached 0.471 billion Hong Kong dollars, achieving a pre-tax profit (excluding investment property fair value changes and exchange differences net amount) of approximately 86.499 million Hong Kong dollars; revenue from department store operations reached 0.582 billion Hong Kong dollars, with a pre-tax profit (excluding investment property fair value changes and lease modification gains) of 46.697 million Hong Kong dollars.

Additionally, it is worth mentioning that the main business segment of Guangdong Inv, which operates the Xingliu Expressway, had toll revenue of 0.479 billion Hong Kong dollars in the first three quarters, achieving a pre-tax profit (excluding net financial expenses) of 0.252 billion Hong Kong dollars. Historically, this business segment has consistently shown stable income and profit performance, providing gd land with a reliable source of cash, especially during periods of macroeconomic volatility, where such stability becomes particularly important. Considering that the Xingliu Expressway operated by Guangdong Inv as part of the transportation artery connecting guangxi and guangdong, with the development of the regional economy and increasing transportation demand, its business volume is expected to continue to improve, contributing more increments to guangdong inv's overall performance growth.

(Source: Company Overview)

It can be said that the highlights of each business segment demonstrate gd land's resilience and adaptability in the face of market challenges. At the same time, this also shows that the company, under flexible market response strategies, can maintain steady growth in complex market situations.

Considering the introduction of a series of stable economic policies at present, the subsequent economic operation is expected to see a stabilizing rebound. The company's various major business sectors will also face a more favorable external macro environment, especially for the real estate-related sectors that have been in a long "crouch", the performance elasticity released is believed to exceed expectations.

2. Continuously activate growth momentum, and quietly await the start of a new cycle.

In the past few years, facing challenges brought by a complex external environment, gd land has always demonstrated a solid operational foundation.

Now, the company has already stood at a new starting point. In this third quarter report, the company mentioned that it will continue to expand upstream and downstream in the water resources industry chain, actively extend to high value-added businesses, optimize asset portfolio and resource allocation while consolidating the scale of core business. At the same time, leveraging its own business and resource endowment, it actively seizes the potential development opportunities brought by the strategic planning of the south china greater bay area concept, and continues to pay attention to the relevant markets.MergerOpportunities, striving to achieve new breakthroughs in profit growth, further enhancing the company's operational performance and overall value.

It is not difficult to see that the company has demonstrated its keen insight into market trends and proactive grasp of future development opportunities. Looking ahead, gd land's performance highlights can also be observed from the following aspects.

Firstly, the stable growth of "cash cows" businesses such as water resources, power generation, and high-speed operation can provide the company with a solid revenue and profit foundation. A solid foundation helps to strengthen market confidence.

Next, the real estate sector, which has been under significant pressure in the past, is ushering in a new situation and is expected to bring greater performance surprises.

Currently, with the stabilization of the real estate market, the company's asset impairment risks in this business area are expected to be further released. It can be seen that in the past, some of the company's property projects experienced significant impairments. However, this year, its subsidiary gd land has not made provisions for inventory impairment, which is a quite positive factor for the company's performance release.

Considering the support of policies and the continuous repair of supply and demand, helping stabilize the real estate market, coupled with the gd land's continuous effectiveness in adjusting strategies in property investment and development business, especially in driving destocking and enhancing property value, will also help further boost performance resilience.

In the longer term, as an important enterprise deeply rooted in the south china greater bay area concept, guangdong inv has a great first-mover advantage in resource endowment, considerable potential for asset value appreciation, and is expected to continuously grasp the policy opportunities and development dividends of this region.

In conclusion, the sustained activation of growth momentum is driving the company into a new growth cycle.

3. Triple logic support, promising outlook for the future

Looking ahead, the company has the following three logical supports to underpin its future performance.

Logic One: Regardless of whether a bull market is coming or not, steady performance and deterministic fundamental analysis repair may bring value regression.

Guangdong Investment has a strong operating strength and has consistently verified its solid fundamental characteristics in different economic cycles. Even in the past, in the context of a deep adjustment in the real estate business sector, the company's profitability remains robust. This cross-cycle performance provides solid support for the company's value growth.

Now, against the backdrop of policy-driven initiatives and improving macroeconomic expectations, the company's strong operating performance, coupled with the potential for certain performance recovery, is expected to support further value restoration.

Therefore, regardless of whether a bull market is emerging, the company's positive fundamental trends are expected to bring positive expectations for its future market performance.

Logic 2: Nurturing incremental growth, opening up elastic possibilities.

As mentioned earlier, the core factors suppressing performance in the past lay in the real estate sector. With the industry warming up, performance is expected to reach a turning point and resonate with sector valuation recoveries.

From a policy perspective, since September, five ministries including the Ministry of Housing and Urban-Rural Development, the Ministry of Finance, the Ministry of Natural Resources, the central bank, and the China Banking and Insurance Regulatory Commission jointly issued multiple real estate easing policies. A combined effort has been made from various aspects including monetary policy, fiscal policy, and real estate finance policy. The intensity of policy initiatives, the willingness to provide support and the stimulus measures are all notably strong. The expectation for the real estate market to stabilize after the fall is steadily rising. At the same time, this will also bring stronger stimulation to the company's real estate business performance. The resonance between fundamentals and valuations will be noteworthy, and the released elastic potential is also highly anticipated.

(Source: Futu Market)

In addition, in addition to the real estate sector, guangdong inv's diversified business layout, in the context of a positive macroeconomic trend, will also provide more highlights for its future performance growth.

Logic three: high dividends, high stock dividends, benefiting from the "safe haven" effect in an uncertain environment.

Under pessimistic expectations, considering the current complex global political and economic environment, from the perspective of external market uncertainties, the long-term characteristics of guangdong inv's high dividends and high stock dividends will also have the "safe haven" effect. This further thickens its "safety cushion," and may also be a potential foreshadowing in subsequent market fluctuations.

The current dividend yield of the company has reached 7%, significantly better than the 1-year deposit interest rate and long-term government bond yield, showing strong attractiveness. Under the current series of bullish policies including guiding long-term funds into the market, the market dividend strategy is expected to continue to receive attention, which will also support the future performance of dividend assets. In the case of guangdong inv, this also heralds good opportunities.

4. Conclusion.

Overall, this latest report card from guangdong inv, with its demonstrated prudent operational capabilities and the release of operational potential, has conveyed a positive signal to the market.

As the macro environment continues to improve, the increasing certainty of the company's performance recovery and the release of long-term value potential are believed to be highlights.