Main points of investment
Our view: the company's managed area grew steadily in the first half of the year, and the growth is expected to be more significant for the whole year, mainly due to the merger of the two acquisition projects of Le Life and Ningbo Hongjian in the second half of the year, which will increase by about 2500 square meters. as a result, it is estimated that by the end of the year, the company's managed area is expected to exceed 41 million square meters, an increase of more than 70 per cent year-on-year. The company is also actively deploying the association and integration of property management, commercial operation and large health business, strengthening coordination and integration, and improving the operational efficiency of each section.
The company's current stock price is 21 times PE in 2020, which is lower than the industry average.
Steady growth in medium-term results: 2020H1 achieved operating income of 550 million yuan, an increase of 40% over the same period last year, of which the income of the property management and commercial operation divisions was 4.1 yuan and 130 million yuan respectively, up 43% and 29% respectively. In the property management division, the income of property management, major owners' value-added and community value-added services was 2.3,1.2 and 60 million yuan respectively, an increase of 30%, 55% and 89% over the same period last year, accounting for 43%, 10% and 22% of the total income respectively. In the business operation division, the revenue from business operations and management and market positioning and solicitation services was 1.1yuan and 30 million yuan respectively, up 45 per cent year-on-year and down 12 per cent, accounting for 20 per cent and 5 per cent of total revenue.
The gross profit was 220 million yuan, up 42% from the same period last year; the core net profit was 110 million yuan, up 29% from the same period last year.
Comprehensive gross profit margin increased slightly: 2020H1's comprehensive gross profit margin was 40.1%, an increase of 0.6 percentage points over the same period last year, mainly due to the growth of value-added by large owners with higher gross profit margin and community value-added services. The gross profit margins of property management and business operations were 39.7% and 41.5% respectively, up 2.5% and 4.6% year-on-year, while the core net profit rate was 19.2%, down 1.6% from the same period last year, mainly due to the increase in the rate of financial expenses and the increase in effective tax rates. under the overall tax arrangement in the second half of the year, the effective tax rate for the whole year is expected to decline compared with the medium-term.
Medium-term stable growth in the area of management: as of 2019H1's property management division in the area of 16.05 million square meters. According to the source of the area under management, the area from the parent company still accounts for the majority, with 93% and 7% from the Chinese Olympic Garden and the third party respectively.
The shopping mall opening plan for the whole year remains unchanged, adjusted to centralized opening in the second half of the year: as of 2020H1, the company provides commercial operation services to 43 shopping malls, with a contract management area of 1.8 million square meters, an increase of 13% over the same period last year. The company provides services to 17 open shopping malls with an area of 800,000 square meters, an increase of 51% over the same period last year.
Six shopping malls are planned to open for the whole year, focusing on operation in the second half of the year.
Risk tips: business expansion is not as expected; property management satisfaction is reduced; property management fee collection rate is reduced; property management fee increase is blocked.