Event: in 2021, the operating income increased by 85% over the same period last year, and the return net profit increased by 50%. In 2021, the company realized operating income of 28.84 billion yuan yoy+84.9%; gross profit 8.86 billion yuan yoy+67.3%; return net profit 4.03 billion yuan yoy+50.2%; end-of-the-year cash 11.62 billion yuan yoy-23.6% The consolidated gross profit margin was 30.7%, down 3.2 pct., from the same period last year. The net profit margin was 14.0%, down 3.2 pct from the same period last year.

Comments: seize the opportunity of M & An and expand rapidly in 2021 The company is good at seizing market opportunities and seizing the opportunity of higher-than-expected fluctuations in the domestic real estate market in 2021. Successively acquired Blu-ray Garbo Service (65% equity), R & F property, Colorado Neighbourhood Lok, Hunan Tianhuan property, Shanghai Xinbiyuan Commercial, Anhui Chenghe property and other targets, and the operation scale expanded rapidly. By the end of 2021, the managed area is about 770 million yoy+103% (the proportion of third-party projects is about 55%), and the contract area (excluding urban services) is about 1.44 billion-ping yoy+75% (54% of third-party projects), which firmly occupies the leading position in the management scale of the domestic property management industry.

2) the growth of community value-added is strong, and the gross profit margin is relatively high: in 2021, the revenue of the community value-added sector is about 3.33 billion yoy+92.2%, although the gross profit margin of the community value-added sector has decreased compared with that of 2020, but it still remains at a high level of 60.5%. From the perspective of the dismantling sector, the revenue growth of community media / local life / park space / home improvement services is relatively fast, with an increase of 179%, 107%, 69%, 68%, respectively, compared with the same period last year. Among them, the community media sector is growing brightly. By the end of 2021, the company has more than 500000 self-operated media outlets, covering more than 260 cities across the country, and has established contacts with Wuliangye Group, Guangming Dairy / FAW Toyota and other industry leaders to carry out various forms of integrated marketing business.

3) to improve operational efficiency through equity incentives and post-investment management: the company always maintains a good governance structure, approves and adopts two share option plans before and after listing, by providing eligible participants with opportunities to acquire shares of the company, encourage all kinds of outstanding talents to work hard for the future development of the company, so as to promote the long-term and stable development of the company. After achieving a sharp jump in scale in 2021, we believe that the focus of the company's work in 2022 will be to improve operational efficiency and improve the overall operating performance of M & A companies through a complete post-investment management system. It is expected that the company's per capita output will increase significantly in 2022.

Earnings forecast, valuation and rating: the company has outstanding brand advantages and scale advantages, has a solid leading position, is good at capturing market opportunities, and rapidly expands its business scale through mergers and acquisitions; the community value-added sector has strong growth and maintains a high gross profit margin; it is expected that the company will improve its per capita operating efficiency through post-investment management and equity incentives in 2022. We slightly raised the 2022 net profit forecast to 5.68 billion yuan (up 1.1%), slightly lowered the 2023 net profit forecast to 7.76 billion yuan (down 0.5%), and increased the 2024 net profit forecast to 10.05 billion yuan. The current stock price corresponds to the 2022-24 PE valuation of 19 times, 14 times, 11 times, the valuation is attractive, maintaining the "buy" rating.

Risk hint: at present, the competition in the property management industry is intensified, there may be greater uncertainty in the third-party extension, and there is uncertainty in the improvement of the operating efficiency of M & A companies.