Event: 2022H1's revenue decreased by 0.89% compared with the same period last year, and its homed net profit decreased by 31.9% in the first half of 2022. In the first half of 2022, the company realized operating income of 2.565 billion yuan yoy-0.89%; homed net profit of 357 million yuan yoy-31.9%; as of June 30, 2022, the company had cash and cash equivalents of about 3.936 billion yuan, and the comprehensive gross profit margin was 26.5%, down 6pct from the same period last year.
Comments: the scale of the third-party external extension has increased, and the independence of Boyu's acquisition has been greatly improved. 1) Deep ploughing the southwest region, market-oriented extension has achieved remarkable results: as of June 30, 2022, the company is in the management area of 250 million square meters, of which the southwest core area has reached 125 million square meters, accounting for 49.7% of the total management area, and the regional density has further increased. The contract area is 374 million square meters, of which third-party sources account for about 70.6%. In the first half of the year, the new admission area is 2130 million square meters, of which 83.8 percent are independent third-party projects, and the company's market-oriented expansion has achieved good results. excellent external expansion ability to provide a strong guarantee for the subsequent scale growth of the company.
2) balanced industry layout and slow short-term performance growth: the company has completed 191 urban layouts, including 685 residential projects and 372 non-residential projects, with full-format service capacity. In the first half of the year, basic property management business income 1.75 billion yuan yoy+34%, due to the epidemic and consumption downturn, the demand for some businesses such as tourism services decreased, community value-added income in the first half of the first half 285 million yuan yoy-56%, some community value-added business model from self-management to a platform to ensure profitability, community value-added gross profit margin increased to 68.8% from 35.7% in the same period last year.
Due to changes in the real estate development environment, the scale of non-owner value-added services shrank, and revenue in the first half of the year decreased by 40.7% compared with the same period last year.
3) Boyu Capital has made a comprehensive offer, and its operating independence has been greatly improved: on September 27, 2022, the company announced that Boyu Investment, the company's second largest shareholder, offered a comprehensive offer of HK $12 per share (a premium of 33.04%). As of the announcement date, Jinke shares held 30.34% stake in Jinke Services, while Boyu Group held 22.69%. The shares offered are all shares except the 16.51% Jinke Services shares already held by Boyu Group and Jinke shares pledged by Boyu Group, with a total consideration of about HK $4.7 billion. Jinke Services Hong Kong Stock Exchange will remain listed after the end of the offer. Boyu has rich experience in investment and business management, which is conducive to improving the efficiency of the company's operation and management; looking forward to the follow-up, the operational independence of Jinke service has been greatly improved, which is affected by the credit risk of the real estate industry, which is conducive to the repair of company valuation.
Profit forecast, valuation and rating: the company adheres to the regional ploughing strategy, the third-party expansion ability is gradually improved, and the cooperation between businesses is high. However, due to the influence of the real estate environment and epidemic situation, the development of non-owner value-added services and community value-added services has been restricted, the performance has declined, and the recovery of demand for value-added services needs to be further observed. We carefully reduce the company's 2022-24 home net profit forecast to 7.6x10 million yuan (down 50%, 53%, 55% respectively). The current stock price corresponds to the 22-24 PE valuation of 9.8 times / 8.2 times / 7 times. It has fully reflected the expected slowdown in performance growth under the influence of the epidemic and the real estate market. After the completion of Boyu's tender offer, the company's operating independence has been enhanced and its operating efficiency has been further improved, but profit repair remains to be seen, and we have downgraded our rating to "overweight".
Risk hints: at present, the competition in the property management industry is intensified, and there may be greater uncertainty in the third-party extension; there is uncertainty in the improvement of the operating efficiency of M & A companies; and there is uncertainty in the impact of changes in ownership structure on operation.