Yiju Enterprise Holdings announced its 2018 results. In 2018, the company achieved operating income of 5.948 billion yuan, an increase of 28.4% over the previous year; operating profit of 1,414 billion yuan, an increase of 47.3% over the previous year; Guimu's core net profit of 1,145 million yuan, an increase of 63.0% over the previous year; and basic earnings per share of 0.8051 yuan.
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Strong shareholders have laid the foundation, and the company's performance is impressive. In 2018, the company achieved operating income of 5.948 billion yuan, an increase of 28.4% over the previous year; operating profit of 1,414 billion yuan, an increase of 47.3% over the previous year; and Guimu's core net profit was 1,145 million yuan, an increase of 63.0% over the previous year. The sharp increase in performance was mainly due to: 1) As a real estate service provider, the company continued to cooperate with 26 top 100 housing companies including Evergrande, Vanke and Country Garden. At the same time, it also attracted cornerstone investors such as OCT, Alibaba, and Singapore CDL. A strong shareholder structure lays a stable foundation for the company's business development. 2) Effective control on the cost side pushed the 2018 net interest rate to 18.2%, an increase of 1.7 percentage points over the previous year. Divided by business structure, the company's first-hand housing agency services, second-hand brokerage service platforms, real estate data and consulting services contributed 79.9%, 7.1%, and 13.0% respectively.
The first-hand distribution layout continues to expand, and business growth is highly certain. By the end of 2018, the company's proposed first-hand housing agency business had expanded to 204 cities, with a sales amount of 531.55 billion yuan, an increase of 22.8% over the previous year; the growth rate of sales scale far exceeded the industry's sales average. At the same time, thanks to a strong shareholder background, the company has signed unsold reserve projects of 282 million square meters, an increase of 36.9% over the previous year, effectively guaranteeing a steady increase in agency revenue in the future.
The number of Roommate stores broke 10,000, and the business grew rapidly. By the end of 2018, EasyJu's roommates stores were located in 56 cities across the country, exceeding 10,000; sales of new homes sold to developers through EasyJu's tenants totaled 34.72 billion yuan, and brokerage revenue was 4.2 billion yuan, up 470.1% and 446% respectively over the previous year. In the future, the company will continue to launch a “30000+” strategy, namely 10000+ stores, 10000+ channels, 10000+ communities, and build a broader brokerage network to enhance synergies between businesses.
Real estate data and consulting services continue to gain strength, and their influence continues to increase. By the end of 2018, the company's system had entered 96809 residential, 21,549 commercial, and 843,513 land projects, covering 387 cities. At present, the business has achieved revenue of 773 million yuan, an increase of 22.9% over the previous year. The company continues to optimize its data system and continuously enhance its influence in the industry.
Investment suggestions: Yiju's three major businesses developed collaboratively to form a closed-loop full-industry chain service, and a strong shareholder background enhanced the certainty and growth of the company's performance; big data and housemate businesses have unique competitive advantages, effectively enhancing the company's authority and popularity. We expect the company's EPS in 2019-2021 to be RMB 0.83, 1.01, and RMB 1.22 respectively, and the corresponding PE will be 12.6, 10.3, and 8.5 times respectively, maintaining the “increase in holdings” rating.
Risk warning: industry sales fluctuations; policy adjustments leading to operating risks (shed reform, regulation, tax policies, etc.); changes in the financing environment (mortgages, development loans, interest rate adjustments, etc.); enterprise operation risks (personnel changes, construction, land acquisition, etc.); risk of exchange rate fluctuations.