Introduction to this report:
The annual report performance is in line with expectations. The pandemic has repeatedly dragged down the recovery process, and gross margins of entrusted businesses and store expansion have all been affected. The effect of the company's asset-light leverage reduction strategy was obvious, and the multi-store layout continued to improve floor efficiency.
Key points of investment:
The performance was in line with expectations, and holdings increased. Considering the repeated impact of the epidemic on the pace of recovery, the 2022/23 EPS was lowered to 0.61/0.71 (-0.08/-0.16), and the 2024 EPS was added to 0.96 yuan. Considering the continued improvement in the company's balance ratio and cash flow, the valuation of 15xPE in 2023 was given, and the target price was lowered to 10.80 yuan to increase holdings.
Performance summary: The company achieved revenue of 15.513 billion yuan/ +9.0% in 21, net profit of 2,047 billion yuan/ +18.31%, and net profit of 1,658 million/ +42.62% after deducting non-net profit from the mother. Among them, 21Q4 achieved operating income of 4.159 million/ -11.70% in a single quarter, net loss of 240 million yuan, break-even for the same period in '20; net profit of 263 million after deducting non-net profit from Gimo, break-even for the same period in '20.
The overall weak recovery from the epidemic has been repeated, and gross margins of entrusted businesses and store expansion have all been affected. ① There was a weak recovery throughout the year, with overall revenue +8.97%, of which rental management was +21.14%, entrustment management revenue was affected by closed stores -9.06% year on year. The growth rate of the home improvement business slowed significantly, falling from +115% in 2020 to 14.01%; ② By the end of 2021, 95 self-operated and 278 outsourced management stores were operated; a net increase of 3 self-operated shopping malls throughout the year, 20 new commissioned shopping malls were closed, and 1 commissioned management was transferred to private operation. Store reserves: 327 commissioned projects.
The effect of the asset-light leverage reduction strategy is obvious, and the multi-store layout continues to improve floor efficiency. ① By continuing to sell asset-heavy properties with high leverage ratios, the company continues to return capital, improve the balance ratio and relieve debt repayment pressure; ② The balance ratio decreased by 3.72 percentage points compared to the end of 2020, and the leverage reduction effect was obvious; ③ The company promoted the layout of multiple stores and launched themed pavilions to continuously improve the efficiency of single stores and adapt to new home improvement needs.
Risk warning: Fair value fluctuates, majority shareholders' balance ratios are high, and equity pledge risks.