The results in the first three quarters of 2021 were higher than we expected.
The company announced its results for the first three quarters of 2021: revenue of 965 million yuan, down 2.5%; net profit of 248 million yuan, corresponding to 0.19 yuan per share, an increase of 47.6%, which was higher than we expected, mainly due to higher-than-expected revenue growth and higher gross profit in the third quarter; deducting 149 million yuan of non-homed net profit, an increase of 4.5%. From a quarterly point of view, Q1/Q2/Q3 revenue is + 12.3%, respectively, 29.4%, 29.4%, 43.5%, respectively, and the revenue side reverses the decline in the second quarter. The net profit of home ownership is + 46.9%, 23.5% and 276.0%, respectively, compared with the same period last year, and the performance growth in the third quarter accelerated significantly.
Development trend
1. 1-3Q revenue was-2.5% year-on-year, and the growth rate improved month-on-month in the third quarter alone. The company deepened industrial operations, enriched industrial supporting services, stabilized rental and property management income, increased Q3 revenue by + 43.5%, and improved 72.9ppt compared with Q2. Excluding the base effect caused by last year's epidemic, compared with the same period in 2019, Q1/Q2/Q3 revenue was-12.5%, 16.9%, 11.0%, respectively, and the growth rate became positive in the third quarter.
2. The overall expense rate remains stable, deducting the non-net interest rate rising slightly. The company's gross profit margin increased by 3.3ppt to 43.1% in the first three quarters, and Q3 gross profit margin increased by 18.6ppt to 44.8% from a low base in the same period last year. The overall performance of the expense side of the company was stable. In the first three quarters, the sales expense rate increased by 0.6ppt to 5.7%; the management expense rate increased by 1.0ppt to 7.3%; the company's subsidiaries strengthened their R & D investment in large-scale professional markets, intelligent industrial parks, and information-based management, and the R & D expense rate increased by 0.5ppt to 0.9%. Under the combined influence, the net return rate increased by 8.7ppt to 25.7% in the first three quarters, while the non-return net interest rate was deducted by 15.4% and increased by 1.0ppt.
3. Follow up to pay attention to the company's business transformation and foreign cooperation investment projects. 1) Transformation and upgrading of main business:
The company steadily promotes the main leather industry, accelerates the online integration process, and cooperates with BABA to build a "cloud market" to form an online and offline e-commerce industry chain integration ecology that integrates live broadcast, supply, warehousing and logistics. 2) the steady development of the great health industry: the business structure of rehabilitation hospitals has been continuously optimized, Yihe homes have docked medical quality resources, the trusteeship of Kip Shi Street Endowment Service Center has been confirmed, and the company continues to promote the construction of medical pension platform to consolidate the second main business direction. 3) Foreign cooperation and investment: on October 25, the company deliberated and approved the establishment of two partnership enterprises, visionary fund and core tide fund, by wholly-owned subsidiaries, with a subscription scale of 420 million yuan and 100 million yuan respectively. The company plans to rely on its own industrial resources to carry out strategic investment through cooperation with professional investment institutions to promote the expansion of the industrial value chain and improve the business layout. Follow up to pay attention to the effectiveness of the company's main business transformation and the progress of new business type.
Profit forecast and valuation
Considering that the company's main business has stabilized and rebounded, the earnings per share forecast for 2021-2022 will be raised by 16% by 10% to 0.21 yuan / 0.19 yuan. The current share price corresponds to 2021 Universe, 2022, 21, 21, 23, P, E, and E, respectively. Maintain a neutral rating and raise the target price by 7% to 4.62 yuan based on earnings forecasts, corresponding to 22 times 2021 price-to-earnings ratio and 24 times 2022 price-to-earnings ratio, which has 3% upside compared to the current stock price.
Risk
The competition in the industry continues to intensify, the repeated impact of the epidemic exceeds expectations, and the progress of the big health business falls short of expectations.
