Key points of investment
Core net profit increased 63.2% year on year, and the performance was in line with market expectations: 2021H1, the company's revenue was 1,325 billion yuan (same below), an increase of 78.8% over the previous year. Among them, property management, pre-delivery and consulting, community value-added and intelligent solution services accounted for 42.7%, 41.7%, 7.4%, and 8.3% respectively, and the business and parent company achieved a high degree of collaboration. 2021H1, the company's core net profit was 222 million yuan, an increase of 63.2% over the previous year, and the core net profit margin was 16.8%. The company's performance was in line with market expectations.
Gross margin declined slightly: 2021H1, and the company's comprehensive gross margin was 32.6%, down 1.2 percentage points from the same period last year. Among them, the gross margins of property management, pre-delivery, and consulting and intelligent solution services in the three businesses where profitability declined were 29.8%, 31.1%, and 30.8%, respectively. The gross profit ratio was 38.9%, 39.7%, and 7.8%, respectively. The decline in the company's gross margin was mainly due to an increase in the share of outsourced third-party projects and an increase in the share of revenue from low-margin businesses. The company's high-margin community value-added business is developing rapidly. The “Little K Life” brand upgrade was completed in the first half of the year. With the optimization of the business structure, the company's profit margin is expected to improve.
The share of third-party projects continues to increase: as of 202H1, the company's operating area was 86.26 million square meters, with a net increase of 28.77 million square meters of area under management, achieving 67.7% of the annual additional area under management; the company's pipe area from third parties accounted for 63.7%, an increase of 13.8 percentage points over the end of 2020.
With 2021H1, the company expanded the management area of about 1,540 square meters, exceeding the full year of 2020. Through the “Jiamei+ M&A” dual brand linkage, the M&A company has the ability to continuously expand; the company's own expansion capabilities are constantly increasing, and the M&A reserves are sufficient. It is expected that the area under management will exceed 100 million square meters throughout the year.
Our view: The company is expanding in multiple dimensions through various methods such as outreach, equity cooperation, and joint venture platforms, actively expanding third-party markets, broadening the boundaries of urban service business, and developing diverse business formats in a comprehensive manner. The scale is expected to grow steadily. The company completed the community value-added service brand upgrade in the first half of 2021, which is expected to maintain rapid growth in the future, driving the company's profitability. The company's valuation is currently in a more attractive position, so investors are advised to pay active attention.
Risk warning: Business expansion fell short of expectations; property management satisfaction declined; property management fee collection rate decreased; property management fee price increases were blocked.