Description of the event
The company achieved revenue of 5.18 billion yuan (+19.1%) in 2022, net profit of 4.2 billion yuan (-19.4%), a dividend of 0.16 yuan per share, and a dividend ratio of 32.9% (+8.3pct).
Incident comments
Core business revenue grew steadily, and the decline in development-related business revenue and the decline in comprehensive gross margin weighed on the company's profits. In 2022, the company achieved revenue of 5.18 billion yuan (+19.1%), of which revenue from basic property management/community value-added /smart park/smart park/developer value-added services was +44.0%/+40.3%/-32.5%/-36.3%, respectively. Revenue from the two core businesses grew steadily, accounting for 83.2% (+13.9pct) of revenue; revenue from smart parks and developers' value-added services declined sharply year-on-year as the real estate industry boom declined sharply, and the company gradually got rid of its dependence on real estate. The non-cyclical business maintained good performance. Group meals/facility management/community convenience service revenue was +334.2%/+54.2%/+14.6% year-on-year, respectively, which became an important growth pole for the company's performance. During the pandemic, service costs increased, and the share of revenue from unprofitable non-residential businesses and group meals increased. In 2022, the company's gross margin fell 5.0 pct year-on-year to 25.8%. Among them, the gross margin of basic property management/community value-added /smart park/developer value-added services was -5.6/-10.2/-0.4/-4.3pct year-on-year to 24.5%/32.2%/16.1%/24.6%, respectively. The dollar bonds held by listed companies further caused the company to lose nearly 170 million dollars. Combined with sales management fees and minority shareholders' profit and loss, the company's net profit fell 19.4% year-on-year to 420 million yuan. Looking ahead, the company's core business is still expected to maintain a steady growth trend. The development of related businesses is expected to continue to reduce revenue drag, and non-cyclical business forms an important profit supplement; once again, there is limited room for gross margin to decline, the shadow of dollar debt impairment has disappeared, and the company's performance is expected to return to a steady upward channel once again.
High-quality expansion continues to be promoted, and the share of the non-residential sector has increased markedly. By the end of 2022, the company's contract/active area reached 31/20 million square meters respectively, +12.2%/+29.1%, respectively. The joint management ratio still reached 1.6, providing a bottom line guarantee for the subsequent growth rate. Dependence on related parties continues to weaken, with third parties accounting for +4.4/+6.3pct of management/contract area to 51.9%/46.7%, respectively. Under the “big community+big logistics” strategy, the scale of non-residential management increased rapidly; in the first half of the year, Tianjin Jinyu Property was acquired to enhance the hospital business service capacity; by the end of the year, the share of the company's non-residential management area increased 6.9 pct to 25.8% year-on-year, contributing 21.1% (+6.1pct) of property management service revenue, which became an important growth pole for the company's size and performance.
The financial security of associated housing enterprises continues to improve, and community value-added services open up long-term space. There have been frequent reports of favorable policies in the development industry. There have been breakthroughs in securing delivery, securing credit, and stabilizing demand. The recent liberalization of consumer public REITs has also brought marginal benefits to related party Xincheng Holdings. Moreover, there have been recent repairs on the sales side of the market, and the suppressing factors of early market sentiment are expected to be marginally mitigated. Continued value-added services for the Nugget Community have opened up the company's long-term profit space. The acquisition of Xuefu Catering and Suzhou Haios continues to strengthen group meal service capabilities. The company's group meal business revenue was +334.2% year on year, with an annual contract amount exceeding 500 million yuan; facility management revenue was +54.2% year over year, and the maintenance business managed about 33,000 elevators. The prospects for value-added services are worth looking forward to.
After the downturn, the performance returned to steady progress, and the company is expected to usher in a valuation repair. The development policy side continues to be optimized, and the factors suppressing market sentiment in the early stages are expected to be marginally mitigated; on-hand reserves and related party support provide a higher performance bottom line, and the continuous improvement of market-based outreach capabilities further supports the growth rate of scale; boosting business format completion and value-added service cultivation, and the results of the “big community” + “big logistics” strategy are highlighted; the negative impact of US dollar debt has been reduced; and the company's performance is expected to move forward steadily. It is estimated that the company's net profit to the mother in 2023-2025 will be 58/68/780 million yuan respectively, and the corresponding PE will be 82/6.9/6.0X respectively, maintaining the “buyer” rating.
Risk warning
1. There may be some downward pressure on gross margin;
2. Market expansion progress is lower than expected.