22H1 performance fell year-on-year, downgraded to "overweight" rating
The company released its semi-annual report on August 30, showing that 22H1 achieved revenue of 2.57 billion yuan,-1% year-on-year, and net profit of 360 million yuan,-33% year-on-year. We downgrade the company's EPS from 22-24 to 1.13, 1.33, 1.60 (before 2.14, 2.78, 3.51). The comparable company's average 2022E PE is 8 times (Wind consensus estimate). Considering that the bond rollover of related housing companies amplifies the uncertainty of the company's operation, we narrow the valuation premium, give the company 8 times 2022E PE, lower the target price to HK $10.28 (previous value of HK $42.12, based on 16 times 2022E PE), and downgrade to "overweight" rating.
The performance is greatly affected by the decline of real estate and the epidemic situation.
The basic material management revenue of 22H1 company is + 34% to 1.76 billion yuan compared with the same period last year, mainly due to the area of management + 34% to 250 million square meters. Driven by the rapid growth and acquisition of catering services, local living services have revenue of + 93% to 220 million yuan compared with the same period last year. However, due to the impact of the real estate downturn and the epidemic, revenue from non-owner value-added services, community value-added services and technology services all declined year-on-year, dragging down the company's overall revenue.
The company's net profit is-33% compared with the same period last year, due to: 1. The gross profit margin is from-6.0pct to 26.5%, mainly due to the increase in epidemic prevention expenses, the contraction of real estate-related business, and the change in business structure; 2. The impairment loss of accounts receivable reached 74.4 million yuan, while 21H1 was only 3.43 million yuan.
The extension of the bonds of related housing enterprises leads to the increase of operational uncertainty of the company.
In May 22, the company's affiliated housing enterprise Jinke shares (000656 CH) had a bond rollover, which not only led to a decline in the company's current performance, but also caused uncertainty to the company's operation: 1. As of 22H1, the company's related party accounts receivable and prepayments were about 2.3 billion yuan. In July, the company announced that it planned to provide related parties with 1.5 billion yuan in asset-backed loans, which required continuous observation of the recyclability of these payments. 2, since last year, the company and related parties have more related transactions (hotel management companies, kindergartens, etc.), whether these transactions can create revenue for the company remains to be seen; 3, 22H1 market extension contract area of 23.48 million flat, year-on-year level, but the termination of the contract area of 1021 million square, related real estate enterprise bond extension will damage the company's brand, and then affect the city extension and stock project renewal remains to be seen.
We will lower the profit forecast and enter the adjustment period of reducing the impact of affiliated housing enterprises and real estate-related business. We have lowered the company's forecast home net profit for 22-24 by 47%, 52% and 54%. The company is expected to enter an adjustment period that will continue to reduce the impact of related housing enterprises and reduce real estate-related businesses (such as non-owner value-added services). The main adjustment factors include: 1, after the extension of the bonds of related housing enterprises, the delivery area and the company's market extension may be affected, it is difficult to carry out mergers and acquisitions in the current environment, and the area under management assumption is downgraded, and the basic property management revenue and gross profit margin are reduced; 2, real estate-related business revenue and gross profit margin are reduced; 3, affected by the epidemic, community value-added services and this life service revenue are reduced; 4, bad debt losses are raised.
Risk hint: the business risk brought by the epidemic, the business risk of related real estate enterprises, profitability and the downside risk of the scale of market expansion, the development of emerging business is not as expected.