Relying on the old to change the king's good fortune industry, both the scale and profit are improved.

A leading property management company focusing on middle and high-end properties: the company is one of the leading integrated property management service providers in China, with more than 20 years of industry experience, and nearly 90% of the properties under management are middle-and high-end properties. The company's property management services cover mid-and high-end residential and non-residential properties, including merchants, office performance venues and stadiums, government buildings, public facilities and industrial parks. By the year of 1H2019, the company has settled in 37 cities of 12 provinces, municipalities directly under the Central Government and autonomous regions, with a contract management area of about 4140 million square meters and a management area of about 36.34 million square meters. According to 2018 data, the area under management from Guangdong-Hong Kong-Macau Greater Bay Area, the Yangtze River Delta and the economic circle around the Bohai Sea accounts for 70 per cent of the total. According to the data of the Central finger Institute, the company ranked 12th in the comprehensive strength of China's top 100 property service enterprises in 2019, and is one of the top 10 listed property service companies in 2019.

The parent company Kaisa has returned to the right track, sitting on a large number of high-quality old renovation resources: the company has established a long-term and stable cooperative relationship with the parent company Kaisa, and most of the properties developed by Kaisa have been delivered to the company for management. After the Black Swan incident, the parent company has returned to the right track and started a stage of rapid development. we initially estimate that in the next three years, the delivery area only from the parent company will bring about 3.46 million square meters, 4.84 million square meters and 6.54 million square meters of management respectively. In addition, considering that the parent company, in addition to the high-quality layout of the existing land reserve (2600 square meters of land storage, 87% of rights and interests are located in first-tier and key second-tier cities), has a large number of high-quality old renovation resources, as of mid-2019, the old renovation covers an area of about 3200 square meters, all located in the Dawan area, and more than 60% of Kaisa's old renovation projects are located in first-tier cities. At the same time, usually 15% of the old projects are equipped with 20% commercial properties, and with the gradual release of the parent company's old projects, the proportion of residential and commercial properties is expected to increase gradually.

Rich experience in non-residential project management: in 2008, the company extended its business to non-residential properties, including commercial properties and office buildings, and began to provide property management services for the Shenzhen World Universiade Sports Center since 2013. maintain a leading position in the stadium management service industry, with rich experience in non-residential property management. From 2015 to 2018, the company's non-residential property income accounted for 63% of the property management income, 56% of the property management revenue, 56% of the property management income, and 46% of the property management income. The area under management of non-residential properties accounts for 9.4%, 8.9%, 10%, 11%, respectively. By mid-2019, the company managed non-residential projects including 12 stadiums (about 1.1 million square meters), 7 commercial properties, 8 office properties, 4 municipal public properties, etc., after years of precipitation, the company has gradually established its own non-residential business brand and began to actively expand to the outside world.

Target price of HK $47.4, buy rating: we believe that the company is a property management company with relatively undervalued but strong development potential in the property management sector. as the parent company gradually improves, the company's endogenous growth potential is gradually released. In terms of valuation, the negative factors that once suppressed the valuation of the parent company are gradually decreasing, which is expected to lead to a gradual increase in the valuation level of the company; for a long time, in view of the company's outstanding ability to expand outside the market and the gradual increase in sales of the parent company, support will be gradually strengthened in the future, while the future performance growth of other mainstream companies begins to slow down, the company may begin to make efforts again, and the momentum for development is not weak. We estimate that from 2019 to 2021, the company will achieve a return profit of 150 million, 212 million, 300 million, and the adjusted net profit will increase by 43% 41% 42% compared with the same period last year. The compound growth of performance in 2019-2021 exceeded 40%. We give 2021 20 times PE, corresponding to the target price of about 47.4 yuan, buy rating.