Core point of view: Jinhe Business layout Cultural Innovation Industrial Park is early and has strong location selection ability. before listing, nearly half of the projects have the characteristics of low cost and high income, so the overall gross profit margin is high. Since listing, the company has actively expanded more mature projects through mergers and acquisitions, the new projects can basically contribute income in the current period, and the performance is released quickly.
Company introduction: China's leading industrial park operators
Jinhe Commercial was founded in 2007 and listed on the Shanghai Stock Exchange in 2020. The company's main business is the positioning design, transformation, investment promotion, operation and service of old urban properties.
Main business: transform old factory buildings and build industrial parks
The company is an indispensable part of the industrial chain of urban renewal and industrial park operation. The main business models are leasing operation, entrusted operation and equity participation operation, of which leasing operation is the most important business mode, accounting for more than 96% of revenue.
As of the first three quarters of 2021, there were 43, 23 and 3 parks operated by the three modes, with a management area of 72, 27 and 110,000 square meters respectively.
Jinhe Business adheres to the regional focus, and the park is mainly located in Shanghai headquarters. At the same time, the company has made great efforts to expand the Beijing market and the core provincial capital cities of the Yangtze River Delta. In the first half of 2021, about 87% of the company's revenue came from Shanghai projects and 4% from Beijing. The regional deep ploughing strategy helps the company to obtain customers and maintain a high occupancy rate.
Competitive advantage: strong profitability and fast performance release
Jinhe Business has a reasonable organizational structure and fine operation, so that the company has a lower expense rate. The sum of the commercial sales expense rate and the management expense rate of 2021H1 and Jinhe is 3% lower than that of the comparable company.
Jinhe's commercial gross profit margin is higher than that of comparable companies in the same industry. Most of the parks that have been put into operation early have low costs and high revenue, and for projects with a long time ago and a gross profit margin of more than 40%, the total revenue accounts for nearly half of the total income. On the other hand, the company has strong location selection ability, as of Q3 in 2019, nearly half of the projects are located in areas with high rent levels and low vacancy rates.
The company adopts a multi-pronged approach, while expanding independently, it actively obtains high-quality projects through mergers and acquisitions. For the whole of 2021, the company added a total of 24 leased operating projects, of which only 2 projects were acquired through independent extension. M & A projects can contribute income in the same year, so the company's performance release pace is faster.
Financial analysis: profit decline affected by new lease criteria
The new leasing criterion has an impact on the balance sheet and profit statement under the leasing mode, resulting in a decrease in profit margin and an increase in asset-liability ratio. Excluding the impact of lease adjustment, the company achieved operating income of 669 million yuan in the first three quarters of 2021, up 19.76% from the same period last year, and net profit of 137 million yuan, up 14.90% from the same period last year. The company's interest-bearing liabilities remain at 0.
Profit forecast and investment advice
We expect the company to achieve operating income of 954 million, 1.194 billion and 1.479 billion from 2021 to 2023, up 29.0%, 25.2% and 23.9% year-on-year, and realize net profit attributable to the parent company of 129 million, 167 million and 219 million, up-17.3%, 29.3% and 31.3% year-on-year. Jinhe Business is suitable to use EV/EBITDA for valuation, the company's current market capitalization corresponding to the 2021 results of 8.5 times, in a low position, compared with the same high depreciation and amortization of companies, valuation has certain advantages. Cover for the first time to give a "buy" rating
Risk hints: the macroeconomic downturn leads to a sharp decline in the rental rate, the risk of default by the property owner or lessor, the risk of customer surrender or the risk that investment is not as expected, and the risk that the information or data used are not updated in a timely manner.