Incident: According to Kerui data, China Resources Land achieved full-caliber sales of 229.1 billion yuan and equity sales of 158.2 billion yuan in January-November.

Comment: Sales are progressing steadily, seizing investment opportunities to lay out core soil storage, and operating business is growing steadily.

Sales continued to improve year over year, and the industry ranking went one step further: According to Kiri data, from January to November 2024, the company achieved sales volume of 229.1 billion yuan (full caliber, same below), down 19.9% year on year, 2.5 pct narrower than the previous October year decline, ranking third in Kerui's “Top 100 Full-Caliber Sales List of Chinese Real Estate Enterprises”, up 1 place from the 2023 ranking; among them, the sales area was 9.95 million square meters, down 17.5% year on year; among them, the October and November companies respectively Sales reached 31 billion yuan and 25.8 billion yuan, with year-on-year increases of 12.4% and 7.0%, respectively, and +83.4% and -16.8%, respectively. The year-on-year upward trend in sales was obvious. In the second half of 2024, the company's total sales volume was 368.7 billion yuan, of which 85% were located in Tier 1 and 2 high-energy cities, with sufficient high-quality saleable resources. The peak sales season at the end of the year is expected to increase promotion and marketing efforts and consolidate the upward trend in sales.

Seize investment opportunities and have abundant core land reserves: In the first half of 2024, the company made steady investments, adding 2.02 million square meters of land storage area, accounting for 87% of the investment amount in Tier 1 and 2 cities. By the end of June 2024, the company had a total land storage area of 56.99 million square meters, of which 47.71 million square meters of land storage for the development business, accounting for more than 70% of the construction area in Tier 1 and 2 cities. From October to November 2024, seizing the recovery of the property market and land supply opportunities in core cities, the company acquired 0.85 million square meters of land storage in the four cities of Shanghai, Guangzhou, Shenzhen and Hangzhou, with a total land price of 41.4 billion yuan. It obtained a total of 4 parcels of land in Shanghai, with a total land price of 19.2 billion yuan. Together with China's overseas development, it obtained 1 parcel of land in Nanshan District of Shenzhen, with a total land price of 18.5 billion yuan, actively supplementing core land storage and laying a solid foundation for subsequent sales.

Shopping malls maintained rapid expansion, and the asset management business grew steadily: as of the end of June 2024, the company's asset management scale reached 449.1 billion yuan, up 5.1% from the end of 23. The main increase came from shopping malls. Among them, the number of shopping malls in operation reached 82, with a total construction area of 10.45 million square meters, an increase of 28.6% over the previous year. The overall occupancy rate was 97.3%, maintaining a high position. In the second half of 2024, the company plans to open about 10 new shopping malls in Beijing, Shenzhen and other places. The shopping malls are steadily developing into large-scale asset management. Lay the foundation for business transformation. At present, the company has built and completed the China Resources Vientiane Life Asset-Light Management Platform as well as two public REITs platforms, Huaxia Huaxia Huarun Commercial REIT and Huaxia Fund China Resources Youchao REIT, to open up asset value release channels. From January to October 2024, the company's cumulative revenue from operating business was 38.7 billion yuan, up 13.1% year on year. Among them, rental income from the operating real estate business was 24 billion yuan, up 14.8% year on year. The second growth curve of “big asset management” contributed significantly.

Profit forecast, valuation and rating: Considering factors such as the large year-on-year decline in sales in the first 11 months of 2024, we lowered the company's 24-26 core EPS forecast to 3.64/3.72/3.88 yuan (the original forecast was 3.94/4.09/4.47 yuan), and the current price corresponds to the 24-26 PE core valuation to 6.0/5.9/5.6 times, respectively. The company's operation is steady, the core land reserves are abundant, and the asset management business is developing steadily, maintaining a “buy” rating.

Risk warning: Sales and land acquisition fell short of expectations, operating business performance fell short of expectations, industry downturn exceeded expectations, etc.