Main points of investment
Maintain the "buy" rating, and lower the target price to HK $5.00: the company has achieved great-leap-forward growth through mergers and acquisitions, and the post-investment integration has been carried out in an orderly manner to supplement the external expansion capacity of non-residential forms. In the future, the company is expected to achieve steady scale growth through the coordinated development of multi-brands and multi-formats. We adjust our profit forecast and estimate that the company's operating income in 2023 will be 48. 4 billion yuan, up 48.8% and 32.3% respectively over the same period last year, and its net profit will be 860 million yuan and 1.08 billion yuan, up 27.4% and 25.3% respectively. To maintain the "buy" rating, based on the downward valuation of the property management sector as a whole, the target price was lowered from HK $11.80 to HK $5.00, corresponding to an 8-fold PE of 2022 to 2023.
The company's performance in 2021 was in line with expectations: in 2021, the company's total revenue was 3.255 billion yuan, an increase of 114.6% over the same period last year; net profit from its parent was 675 million yuan, an increase of 108.9% over the same period last year; and earnings per share was 0.33 yuan, an increase of 73.7% over the same period last year.
Due to factors such as acquisitions and the increase in public construction projects, the comprehensive gross profit margin decreased: in 2021, the company's comprehensive gross profit margin was 37.7%, a decrease of 4.4pps compared with the same period last year, mainly due to the relatively high non-residential status of the acquisition target, and the relatively low gross profit margin of public construction and urban service business, coupled with the decline of basic property management gross profit margin with the expansion and transformation of third-party properties.
The scale of property management has grown by leaps and bounds: after the company acquired Cedar Zhaopin, Shanghai Shenqin and Guangdong Terry in 2021, the scale grew by leaps and bounds, with a management area of 206 million square meters, an increase of 395 percent over the same period last year; and a contract area of 278 million square meters, an increase of 420 percent over the same period last year. Benefiting from the rich experience of the acquired company and the landing of the multi-brand strategy, the company added a new management area of about 1981 million square meters in 2021, an increase of 225% over the same period last year. From the composition of the format, 52% comes from non-residential forms, including government properties, schools, hospitals and public properties. We are optimistic that the company will continue to expand non-residential forms through multi-brand cooperation.
The indicators of commercial operation maintain the excellent level of the industry: in 2021, the company has opened 12 shopping malls, achieving a year-on-year increase in passenger flow and sales of more than 50%, and a rental rate of more than 88%. At the same time, the company operates 6 office buildings and maintains a 100% collection rate. the rental rate exceeds 88%, all of which are excellent in the industry.
Risk tips: business expansion is not as expected; property management satisfaction is reduced; property management fee collection rate is reduced; shopping mall operation is not as expected