Event: the company announced that it intends to buy back no more than 10% of the issued shares in the open market on September 13, 2021, and the company issued an announcement on its intention to buy back shares in the open market. According to the announcement, the board of directors believes that the current share price does not fully reflect the value of the company, and the company will repurchase no more than 126 million shares in the open market, accounting for about 10% of the company's issued shares, depending on market conditions and actual needs.
Comments: the fundamental development of the company is sound, and the share repurchase shows that the company is full of confidence in the future development. 1) the operation is sound, the development is solid, the strategy is clear, and the share repurchase demonstrates the company's confidence: 2021H1, the company's performance maintained rapid growth, with revenue of 1.564 billion yuan (year-on-year + 41.5%) and net profit of 260 million yuan (+ 41.5%) during the reporting period. The proportion of related party transactions in companies has decreased significantly, with the proportion of related parties in trade receivables falling to 56.2% as of June 30, 2021 (71.6% at the end of 2020). The company will pay interim dividends to shareholders totaling about 152 million yuan (HK14.5 cents per share), with a dividend distribution ratio of about 59%, which is at a high level. By the end of June 2021, the company's cash and cash equivalents reached 2.61 billion yuan, and there was no mortgage guarantee for the loan, the financial position was healthy and sound, and it could effectively protect the business operation and development while realizing the share repurchase. In this context, the company announced the repurchase of shares reflects the company's confidence in its own development prospects, the company's fundamentals are solid and sound, buybacks at the current price level can benefit the company and shareholders.
2) with the deep ploughing of the Greater Central Plains, the income structure has continued to improve, and the operating efficiency has improved steadily: by the end of June 2021, the company has managed an area of 115 million square meters; in the first half of the year, the third-party extension has grown strongly, with a third-party area of 55.35 million square meters, accounting for 48.2% of the total area under management (an increase in 3.1pct compared with the end of 2020). The company's income structure continued to improve, with the proportion of community value-added services revenue rising to 22.9% (year-on-year + 3.9pct.) in the first half of the year. During the reporting period, the expense rate decreased, the management expense rate was 9.3% (year-on-year-1.3pct.), the sales expense rate was 1.7% (year-on-year-0.4pct.), the operating efficiency improved steadily.
2) build a multi-life service ecosystem with the "Jianye +" platform as the core: as of 2021H1, the "Jianye +" platform has a total of about 4.7 million registered users, an increase of 67.9% over the same period last year. With the gradual recovery of offline consumption scenes in the future, it is expected that the potential of intra-plate tourism services, Jianye canteen and other business is expected to be further released.
In July 2021, after the rainstorm, flood and repeated epidemic situation in Henan Province, the company always stood in the front line of disaster resistance with a bold attitude, fully reflecting the positive significance of property companies' participation in community governance and highlighting the service value of "the last kilometer".
Profit forecast, valuation and rating: the company has obvious advantages in deep ploughing, and its operating efficiency has improved steadily. We maintain the 2021-2023 homing net profit forecast of 612 million yuan, 865 million yuan, 1.212 billion yuan, the current stock price corresponding to the 2021-2023 PE valuation of 9.6,6.8,4.9times, maintain the "buy" rating.
Risk hint: the risk of rising human resources cost; the repeated risk of COVID-19 epidemic situation; the dependent risk of related parties of the parent company.