Performance preview
Profit is expected to grow by 115% in 2021 compared with the same period last year.
We expect the net profit of Hejing leisurely living to increase by 115% to 690 million yuan in 2021 compared with the same period last year, which is basically in line with market expectations.
Pay attention to the main points
The area expansion in 2021 is in line with the expected pace, scale and format to achieve great-leap-forward development. We expect the company to increase its management area by 160 million square meters to more than 200 million square meters in 2021, which is in line with the previously proposed annual target. It is expected that the additional management area contributed by M & A will be about 1.3-140 million square meters (mainly the orderly merger table of the company's merger and acquisition of Cedar Holdings and Shanghai Shenqin, etc., as well as Terijie, which the company announced in January 2022). The bid contributed about 1900 to 2000 square metres of new floor space (non-residential is expected to account for about 40 per cent). In terms of business formats, we estimate that by the end of 2021, non-residential formats will account for about 50% of the managed area (most of which are public construction), basically forming a multi-format layout of residential, commercial and public construction.
The multi-business lines of residential, commercial operation and public construction are making steady progress. We expect the income of the residential sector to achieve rapid growth in 2021. On the one hand, taking into account the income from residential projects brought by Cedar Holdings, on the other hand, in the community value-added service side, the company has recorded rapid growth in the first half of 2021. Taking into account the further layout of the company's business in Meiju, home and park space in the second half of the year, community value-added services are expected to exceed 600 million yuan (290 million yuan in 2020). In the non-residential sector, the commercial operation business advanced steadily in 2021, opening three office projects in Beijing and Guangzhou during the year, and the passenger volume and sales of the shopping malls opened in 2020 achieved an increase of about 50% compared with the same period last year. Public Construction sector, Cedar Holdings and Shanghai Shenqin merged smoothly during the year, and the company also recently announced the acquisition of Terry Jie to further improve its business layout in the areas of sanitation and urban services. we expect that the revenue contribution of the public construction sector in 2021 is expected to reach about 10-15% (it is expected to account for 2022 or further upward).
Valuation and suggestion
Considering that the consolidation time of some acquisition targets lags slightly, we reduce the net profit of 2021 and 2022 by 4% and 6% to 690 million yuan and 1.08 billion yuan (up 115% and 55% year-on-year). At the same time, the profit forecast for 2023 is expected to be 1.43 billion yuan, an increase of 33% over the same period last year. Taking into account that the previous market risk preference has fully declined and the company's profit forecast has been adjusted downwards, the company's target price has been lowered by 35% to HK $5.6, corresponding to 67% upside space and 9 times the target price-to-earnings ratio for 2022. Maintain an industry rating that outperforms. The company is currently trading at 5.4 times 2022 earnings.
Risk.
The progress of the external extension of the third party bidding is not as expected, and the progress of M & An integration is not as expected.