FY21 performance meets expectations and maintains "Buy" rating
The company released its annual report on March 31, with revenue of 1.4 billion yuan in 2021, + 46% compared with the same period last year, and net profit of 320 million yuan, + 47% compared with the same period last year, basically in line with our expectations (330 million yuan). Considering the high cost of maintaining the service quality of the company, we reduce the company's gross profit margin forecast and estimate that the EPS in 2024 is $1.60 and $2.1996 (pre-2023 EPS is $1.87 and $2.71). Comparable company's average 2022 forecast PE is 15.3 times (Wind consensus expectation). Taking into account the company's brand strength, we believe that it is reasonable to forecast PE 18.0x in 2022, with a target price of HK $35.56 (previous value of HK $45.00, based on 21.1 times 2022 forecast PE) to maintain the "buy" rating.
Strengthen the expansion of third-party and non-residential projects, high-end quality labels highlight the company's basic material management revenue increased by 52% to 840 million yuan in 2021, mainly due to the rapid expansion of the area under management. As of the end of 2021, the company's area under management / contract area is 2995,4978 million square meters, which is 40% higher than that of the same period last year. The company continues to increase market expansion efforts, through the city extension to increase the contract area of 1068 million square meters, year-on-year + 160%, in the management area of the third party accounted for + 13.4pct to 48.2%.
In addition, the company has also strengthened the expansion of non-residential projects, accounting for + 5.8pct to 21.1% of the managed area compared with the same period last year. High-end service quality is still an important label of the company, the average property fee in the project is as high as 4.30 yuan / flat / month, and the collection rate of property fee is 96.5%.
Brokerage services promote the rapid increase of 5S value-added services revenue and gross profit margin. In 2021, the company's 5S value-added services revenue increased by 48% to 140 million yuan compared with the same period last year. Among them, Youjia service revenue soared 155% to 90 million yuan compared with the same period last year, mainly because brokerage services rely on online platforms + offline stores to accelerate expansion, adding new new home agency sales business. At the same time, the gross profit margin of this kind of business is higher, driving the gross profit margin of 5S value-added services to 71.3% from the same period last year by + 16.3pct. Revenue from Youju services declined year-on-year, mainly because fewer customized homes were involved in 2021 delivery projects.
Rapid growth is expected to continue in 2022.
Although the scale of the company's management area is not large, the quality service label is outstanding and has a high reputation in Hangzhou and Zhejiang Province. We expect the company to rely on the solid support of Binjiang Group (002244 CH), the expansion advantages brought by high-end brand power, and the rapid development of 5S value-added services. In 2022, the growth rate of managed area, revenue and return net profit is expected to reach about 40% year-on-year.
Risk hints: the epidemic affects the development of business; the expansion speed of the city extension, the development of 5S value-added services, and the overall profit margin are lower than expected.