Revenue increased significantly year over year. The company's total revenue in 2018 was about 5.95 billion yuan, up 28.4% year on year, net profit was 1.08 billion yuan, up 41.3% year on year. Guimu's core net profit was 1.14 billion yuan, up 63% year on year. Basic earnings per share were about 0.81 yuan per share, up 14.36% year on year. In terms of profit margin, the company's gross profit margin was about 35.19% in 2018, an increase of 3.24 percentage points over the previous year, and the net interest rate was 18.18%, an increase of 1.67 percentage points over the previous year.
Segmented businesses are going hand in hand. ① First-hand housing agency sales service: In 2018, the company's first-hand housing agency sales service covered 204 cities, achieving a transaction amount of 531.55 billion yuan, an increase of 23% over the previous year. By the end of 2018, the area of unsold reserve projects signed by the company reached 281 million square meters, an increase of 37% over the previous year. ② Real estate data and consulting services: By the end of 2018, the company's real estate database and analysis system had entered more than 96809 residential projects, 21,549 commercial projects, and 843,513 plots of land. The data covered 387 cities in China. In 2018, the business generated revenue of 773 million yuan, an increase of 23% over the previous year. ③ Real estate brokerage network service: In 2018, the company achieved a nationwide network of 10,000 housekeeper stores, covering 56 cities. The company expanded its second-hand linkage business in 2018. By the end of 2018, the company had sold about 21,000 new housing projects to real estate developers through EasyHome tenants, an increase of 890% over the previous year. The total sales amount was about 34.7 billion yuan, an increase of 470% over the previous year.
The business is resistant to cycles and continues to lay out stock markets. We think the industry's overall new home sales will be under pressure in 2019. Considering the company's shareholders' resource advantages and brand advantages, as well as the company's sales area of unsold new homes exceeding 280 million square meters, we believe that the company's new housing agency sales have some resistance to cycles. In addition, the company will continue to lay out the stock market, continue to expand the real estate brokerage network, launch a 30,000+ strategy (10,000+ stores, 10,000+ channels, 10,000+ communities) to further expand and strengthen, opening up the full distribution field from housing, to channels, to communities and even consumers. We believe that the company's real estate brokerage business (housefriends) will become more and more mature, and because of its asset-light model, the business is expected to maintain rapid scale expansion and achieve continuous revenue growth.
Investment advice: “Better than the market”. We expect the company's EPS in 2019 to be around $0.77 per share, giving the company 17-19 times its 2019 PE valuation. The corresponding reasonable market value is HK$226-25.2 billion, the corresponding reasonable value range is HK$15.36-17.17 per share (RMB 13.14-14.68 per share), corresponding to 0.21-0.24 in 2019. (Unless otherwise specified in this article, prices are in RMB, RMB 1 = HK$1.17)
Risk warning: 1) New home sales face double downward pressure on sales area and prices, causing revenue to fall short of expectations. 2) Competition in the real estate brokerage business has intensified, causing resistance to the expansion of the home-mate business.