Event: Nandu property released the third quarter report of 2020. In the first three quarters of 2020, the operating income was 1.017 billion yuan, an increase of 12.78% over the same period last year, and the net profit was 105 million yuan, an increase of 21.32% over the same period last year, deducting 83.4245 million yuan from non-net profit, an increase of 25.94% over the same period last year. 2020Q3's revenue was 357 million yuan, an increase of 12.7% over the same period last year, and its net profit was 37.0572 million yuan, an increase of 21.28% over the same period last year, deducting 28.463 million yuan from non-net profit, an increase of 20.25% over the same period last year.
Comments:
The newly signed area has increased steadily, and the cost has been well controlled during the period. As of September 30, 2020, the company has signed a total of 545 projects with a total signed area of 66.537 million square meters. From January to September 2020, the company has signed 65 new property service projects with a newly signed area of about 7.5292 million square meters. The number of new contracts signed by the company is 10; the number of consulting contracts signed by the company is 1. In the first three quarters, the company's gross profit margin decreased to 23.48% compared with the same period last year; the sales expense rate dropped 0.3pct to 1.52% year-on-year, mainly because the epidemic affected market expansion; the management expense rate decreased from 1.5pct to 7.94%; the R & D expense rate decreased to 0.08% from the same period last year, mainly because the company's information system was in the period of adjustment and maintenance; and the financial expense rate decreased by 0.03pct to-0.11% year-on-year.
Cooperation with government-backed companies is conducive to the rapid expansion of the company's projects. Nandu property signed a cooperation agreement with Hangzhou Canal Group and Hangzhou Tourism Group. Hangzhou Canal Group reached a strategy with Nandu property through competitive negotiations, and joined Hangzhou Tourism Group to form Canal scenery. With the development of the north of the Great City and the gradual promotion of the construction of the Grand Canal National Cultural Park, Hangzhou Canal Group will form property assets of about one million square meters in the future. Cooperate with Jingdezhen state-owned enterprises to establish Guoxin Nandu (Jiangxi) Commercial Management Co., Ltd., provide property services to the real estate under the partner, and realize the meticulous whole process management of "investment and management" in urban space under the jurisdiction of the partner. expand the scale of urban space management and improve the efficiency and quality of urban services at the same time.
Strengthen regional advantages and expand the field of urban space services. Key expansion has been stationed in provinces and cities, strengthen the company's regional advantages, accelerate the layout of Beijing, Tianjin and Hebei, enter Hebei Province for the first time; cooperation with Jingdezhen state-owned enterprises is the first time that Nandu property has entered Jingdezhen, ploughing Jiangxi region. The company actively broadens the market segment track, helps the urban public space service, and wins the bid for many non-residential projects, such as Xia Yan Film and Television Cultural District, Hangzhou Iron and Steel Base, Xi'an Hi-Tech Wisdom Industry Park, Jiangsu multi-community and street municipal sanitation, and so on.
Investment strategy: we predict that the company's return net profit from 2020 to 2022 will be 1.42 billion yuan, an increase of 24.4%, 20.3%, 17.8%, and maintain the "buy" rating.
Risk hints: the risk of rising labor costs, the risk of not fully recovering property fees, the risk of intensified market competition, and the risk of real estate regulation and control.