Core business continued to grow. The depreciation of US dollar bonds and the decline in cyclical business put pressure on profits: in 2022, the company achieved operating income of 5.18 billion yuan, an increase of 19.1% over the previous year, of which core business revenue was 4.31 billion yuan, an increase of 42.9% over the previous year; the company's comprehensive gross margin was 25.8%, down 5.0 percentage points from the previous year, mainly affected by the epidemic and changes in the business structure; Guimu's net profit was 4.2 billion yuan, down 19.4% from the previous year, mainly due to the downturn in the real estate industry, which led to a decline in related cyclical business revenue and the company's investment in US dollar debt of 172 million yuan Yuan impairment loss; dividends of 0.16 yuan per share throughout the year, the corresponding payout rate is about 33%, and the dividend payout is stable.
Accelerate the repayment of accounts receivable and actively adjust the business structure: In the second half of 2022, the company accelerated the repayment of accounts receivable. As of the end of 2022, the average turnaround days for corporate trade receivables was 75.3 days, which remained stable. The average provision ratio was 9.5%, a slight decrease from 202H1. Furthermore, with regard to smart park services related to real estate development and value-added services for developers, the company voluntarily withdrew from high-risk projects, and revenue from smart park services and developers' value-added services fell 32.5% and 36.3%, respectively, in 2022.
The market expansion capacity of the non-housing sector has improved, and the business structure has improved: by the end of 2022, the company's managed area and contract area were 198 and 313 million square meters respectively, up 29.1% and 12.2%, respectively; projects from third parties accounted for 51.9% of the area under management, up 4.4 percentage points from the previous year.
The company has steadfastly implemented the “big property+big logistics” strategy, actively improving service capabilities and market expansion capabilities in the non-residential business format. It has made breakthroughs in various property types such as hospitals, colleges, offices, enterprises, and shopping malls. In 2022, the non-residential sector accounted for 25.8% of the company's area under management, an increase of 6.9 percentage points over the previous year.
The group meal, facility and equipment business grew rapidly: in 2022, the company achieved community growth service revenue of 1.28 billion yuan, an increase of 40.3% over the previous year; gross profit was 4.1 billion yuan, an increase of 6.8% over the previous year. Among them, group meal services and facility management services achieved revenue of 360 million yuan and 240 million yuan respectively, with year-on-year increases of 334.2% and 54.2%, respectively. By the end of 2022, the company's annual group meal contract amount had exceeded 500 million yuan. At the same time, a market expansion team was set up, and group meal revenue growth is highly certain. Furthermore, the number of elevators managed by the company is about 33,000, and elevator installation contracts exceed 40, and elevator installation is expected to become a growth point for new business.
Maintaining the “buy” rating, target price of HK$8.0: We believe that the impairment losses of US dollar bonds in 2023 and the impact of real estate development-related business on the company's revenue and profits are expected to decrease, and the company's profits are expected to bottom out. We expect the company's net profit to be 596/673/758 million yuan in 2023/2024/2025, respectively, up 40.8%/12.8%/12.7% year-on-year, respectively. Maintaining the “buy” rating, the target price is HK$8.0, corresponding to 2023/2024 PE 10/9 times.
Risk warning: Market expansion falls short of expectations; value-added business expansion falls short of expectations; further depreciation of US dollar bonds.