The company's revenue grew steadily and its profitability was slightly weighed down by credit impairment in 2022, and 2023Q1 has been repaired. In 2022 & 2023Q1 achieved revenue of 1.8 billion yuan and 500 million yuan respectively, an increase of 15.9% and 12.2% respectively over the same period last year. In terms of profitability, the company's net profit and return net profit in 2022 were 200 million yuan and 150 million yuan respectively, down 8.6% and 10.7% respectively from the same period last year. The main reasons are: (1) the gross profit margin fell 3.3 pct year-on-year in 2022; (2) the company carries out a single bad debt calculation operation for a single major customer based on the principle of prudence. In the first quarter of 2023, external unfavorable factors were released and the company's profitability was repaired. 2023Q1 gross profit margin increased by 2.0pct to 21.6% compared with the end of 2022, and net profit and homing net profit increased by 8.2% and 7.2% respectively compared with the same period last year.
The ability of cost control continues to improve, there is plenty of cash on hand, the dividend ratio is maintained at a high level, and the dividend yield is relatively stable. (1) the company's expense rate has been declining for many years, and the combined proportion of sales expenses, management expenses, financial expenses and R & D expenses in revenue in 2022 decreased by 0.6pct to 8.9% compared with 2021, and this proportion further decreased by 0.5pct to 8.4% in 2023Q1. (2) by the end of the first quarter of 2023, the company's registered monetary capital has reached 900 million yuan, of which 300 million yuan is available. Abundant cash reserves can support the company to flexibly adjust its M & A strategy and expand its scale at the right time. (3) the dividend ratio in 2022 is 40.01%, which is at a higher level compared with A-share companies. The dividend yield has remained at 2%-3% since 2018.
The "one" business ploughs the core area, the scale continues to expand, and the format continues to be rich; "two wings"
Business transformation and development. (1) property basic services are still the company's main source of revenue, accounting for 86.2% of the main business income in 2022, and its contract scale continues to expand. In 2022, the company accounted for 87% of the signed area in the Yangtze River Delta (Jiangsu, Zhejiang, Shanghai and Anhui provinces), an increase of about 5pct compared with 2021, and the project density in the dominant areas continued to increase. In addition, business formats continue to be rich, with business writing and urban service formats accounting for more than 50% of the newly signed area in 2022. (2) value-added services were affected by fluctuations in the real estate industry in 2022, with revenue falling 7.9% compared with the same period last year, but its retail sales increased significantly. The asset management business changed its operating strategy, withdrew from the loss-making long-term rental apartment project, and mainly promoted the asset operation model, resulting in a substantial improvement in profitability. The full-year gross profit margin increased by 40.7pct, from negative to positive.
Investment suggestion: the company develops actively, continues to enrich the service format, the regional deep ploughing, the advantageous area project density is expected to further enhance. Revenue growth is solid, and profitability is expected to be repaired after the release of external unfavorable factors.
The retail business plans to lay out more new retail products, improve the utilization rate of resources, change the operation strategy of the asset management business in a timely manner, withdraw from loss-making projects, and greatly improve profitability. We estimate that the EPS of the company from 2023 to 2025 is 0.89 yuan, 1.01 yuan and 1.14 yuan respectively, and the corresponding PE is 13.4x, 11.8x and 10.5x, respectively, based on the closing price on July 12, 2023. Coverage for the first time, giving a "overweight" rating.
Risk tips: business development is not as expected, labor costs have risen sharply, the risk of bad debts, retail business promotion is not as expected.