Revenue is growing year over year. From January to September 2024, the company achieved operating income of 78.009 billion yuan, up 2.88% year on year, and realized net profit attributable to shareholders of listed companies of 2.601 billion yuan, down 31.00% year on year. Basic earnings per share were 0.22 yuan/share, down 43.59% year on year, mainly due to the year-on-year decline in gross margin carried over from the company's development business projects. From January to September 2024, the company's gross margin was 9.95%, down 8.30 percentage points from the same period in 2023; the company's net margin was 4.38%, down 2.90 percentage points from the same period in 2023; and the three expenses ratio was 6.41%, down 0.10 percentage points from the same period in 2023. As of the end of September 2024, the net cash flow from the company's operating activities was 12.971 billion yuan, a year-on-year decrease of 49.58%, mainly due to a year-on-year decrease in sales repayments for real estate projects.

Sales performance declined year over year, and industry rankings remained leading. From January to September 2024, the company achieved a total contracted sales area of 6.4244 million square meters, a year-on-year decrease of 29.99%; the cumulative contracted sales amount was 145.171 billion yuan, a year-on-year decrease of 35.85%. According to China Index data, from January to September 2024, the company's full-caliber sales area was 6.38 million square meters, ranking sixth in the country, and the full-caliber sales amount was 145.14 billion yuan, ranking sixth in the country.

The first order was to repurchase the special loan in response to the call to maintain the market. On October 20, 2024, the company signed a “Cooperation Agreement” with CMB Shenzhen Branch and obtained a “Loan Commitment Letter” issued by CMB Shenzhen Branch.

The Shenzhen branch of CMB plans to provide a loan amount of no more than 0.702 billion yuan for the company's stock repurchase project. The loan period is 12 months. In principle, the loan interest rate should not exceed 2.25% and the market interest rate.

Lease REITs are listed and issued to revitalize assets and broaden funding channels. The sale of China Merchants Fund Shekou Rental Housing REIT was completed on September 20, 2024, and listed on the Shenzhen Stock Exchange on October 23, 2024.

China Merchants Fund Shekou Rental Housing REIT raised a final fund share of 0.5 billion shares, the sale unit price was 2.727 yuan/share, and the net capital raised by the fund was 1.3635 billion yuan; when combined with interest during the fundraising period, the total amount raised by the fund was 1.3687 billion yuan.

Investment advice: Maintain an “better than the market” rating. We forecast the company's EPS of 0.67 and 0.72 yuan respectively in 2024 and 2025. Considering that the company maintains a competitive advantage in sales and has a strong financing background, in the context of current market supply-side reforms, we are giving the company a moderate valuation premium, that is, 18-20XPE in 2024, with a reasonable value range of 12.04-13.38 yuan, maintaining a “superior to the market” rating.

Risk warning: The industry faces downside risks.