23H1's revenue was +20% year over year, and net profit was +22% year over year, in line with expectations. 2023H1, the company achieved revenue of 8.20 billion yuan, +20.1% year on year; core operating profit of 7.1 billion yuan, +20.2%; realized gross profit of 4.2 billion yuan, +21.8%, in line with market expectations; basic earnings per share of 0.13 yuan, +22%; gross margin and net profit margin were 18.7% and 5.1%, respectively -0.5 pct and +0.1 pct, year-on-year; sales and marketing expenses of 150 million yuan, +22.9% year on year; administrative expenses of 670 million yuan, +11.7% year on year, lower than The revenue growth rate was 20.7%, and the management expenses rate was 8.2%, -0.6 pct over the same period last year. The changes in performance are mainly due to: 1) a steady increase in management scale; 2) optimization of management rates and slight restoration of net interest rates; 3) impairment losses of 120 million yuan due to the increase in the age of accounts receivable, and +15.6% year-on-year.
23H1 managed area +19%, third party managed 85%, and property fee unit price +0.3%. At the end of 2023H1, the company's management area reached 415 million square meters, +18.7% year on year; reserve area reached 379 million square meters, +3.7% year on year; reserve/management coverage rate was about 0.9 times; and the single-year contract amount was 1.52 billion yuan, or -9% year on year, of which non-residential accounts for 46.0%, +4.7 pct. At the end of 2023H1, 1) residential and non-residential properties accounted for 80% and 20% respectively; 2) Greentown real estate and third parties accounted for 14.8% and 85.2% respectively; 3) East China/Bohai Rim/Pearl Delta/other regions accounted for 59.1%/15.7%/8.4%/16.7% respectively. According to the company's performance promotion materials, 2023H1, the company's average property fee is 3.21 yuan/square meter* month, +0.3% year on year, and the unit price of property fees remains at a high level in the industry; the collection rate reached 98.2%, +1.3 pct, the renewal rate reached 98.3%, and -0.1 pct year on year. Both the collection rate and renewal rate remained high.
Property service revenue was +20% year-on-year, gross margin was flat, park service revenue was +27%, and gross margin was restored. 2023H1, the company's property services, park services, consulting services, and technology services achieved revenue of 52.5, 16.6, 10.8 and 210 million yuan, respectively, with a year-on-year ratio of +20.4%, +26.5%, +12.3%, and +6.6%, accounting for 64.1%, 20.2%, 13.1%, and 2.6%, respectively. The gross margins were 13.8%, 24.3%, 30.1%, and 36.6%, respectively, the same as the previous year, +1.1, -5.9, +5.3 pct. Among consulting services, building industry services and management consulting services were +13.7% and +3.1%, respectively, accounting for 88% and 12% of consulting service revenue; in park services, park products and services, home living services, park space services, property asset management services, and cultural education services, respectively, +10.2%, +122.6%, +21.3%, +20.7%, and +32.4% of park service revenue, respectively, accounted for 34.9%, 13.3%, 8.7%, 22.9%, and 20.2% of park service revenue. The gross margin of property services remained flat; the gross margin of consulting services declined, mainly affected by the real estate environment; and the increase in gross margin of park services was mainly due to a decrease in the impact of the epidemic.
Investment analysis opinions: Steady growth in performance, expansion of high-quality promotion, and maintenance of “buy” ratings. Greentown Services has achieved stable and continuous expansion through third-party expansion. The company is known for its service quality. The region focuses on the Yangtze River Delta. The collection rate, renewal rate, and bid rate are all at a high level in the industry, and the ability to raise property fees is relatively strong. The medium- to long-term profit margins are more stable, and it is expected to take the lead in exploring value-added service space in the later stages of the industry, and is expected to lead the gold track in the property management industry. We maintain the company's earnings forecast of 0.22, 0.26, and 0.32 yuan per share for 2023-25. Considering that Greentown Services is a third-party quality property management enterprise, it is expected to benefit from the optimization of the real estate and property management pattern in the future, and in the context of post-epidemic recovery, profit margins are expected to gradually improve and maintain the “buy” rating.
Risk warning: The expansion of value-added services has fallen short of expectations, and profit margins have declined due to rising labor costs beyond expectations. There is still uncertainty about lawsuits involving them.