Incident: Greentown Service's revenue for the first half of 2023 +20%, net profit for the first half of 2023 Greentown Services announced the 2023 interim results announcement, achieving revenue of 8.2 billion yuan, a year-on-year increase of 20.1%, and gross profit of 1.53 billion yuan, a year-on-year increase of 16.6%, a gross profit margin of 18.7%, a year-on-year decline of 0.5 pct; net profit of 4.2 billion yuan, up 21.8% year on year. The company's revenue came from four major sectors. Property services/park services/consulting services/technology services achieved revenue of 52.5/16.6/1,08/210 million yuan respectively, up 20.4%/26.5%/12.3%/6.6% year-on-year respectively, and accounted for 64.1%/20.2%/13.1%/2.6% of revenue, respectively.
Comment: The scale is steadily expanding, the business structure is being optimized, park services are recovering steadily, and the technology business is poised to start 1) The management scale is steadily increasing, and the reserve area is still rich. As of June 30, 2023, the company's management area was 415 million square meters (an increase of 30.5 million square meters compared to the end of 2022). From a structural point of view, 80.5% of the pipe area was residential, accounting for a slight increase of 2.4 pct compared to the same period last year; from the perspective of regional layout, the company's management area was mainly concentrated in the Yangtze River Delta and Greater Hangzhou regions, which together accounted for 52%. While the scale was steadily expanding, the core advantage areas continued to be cultivated; by the end of June, the company still had a reserve area of about 380 million square meters to be delivered, and reserve projects were abundant. At the same time, As an independent third-party property enterprise, the company has a high degree of marketization, service quality and outreach capabilities are benchmarks in the industry. In the current environment, it has a certain competitive advantage in outreach, and the company's future scale growth is highly sustainable.
2) The business structure has been optimized, the gross profit margin of property management has stabilized, and park services have recovered steadily. The total gross profit share of property services and park services in the first half of the year was 73.7%, up 4.7 pct from the same period last year, while consulting services (including services in the building industry, etc.) accounted for 21.2%, down 5.1 pct from the same period last year. The core business developed steadily, the overall profit structure was optimized, and the gross profit margin of the property management business was 13.8%, which was the same as the same period last year; during the period, the company's park services focused on owners' living needs and real estate life cycle needs, continuously optimized the service portfolio and improved operating capacity. As residents' community consumption recovered steadily, sector revenue increased year-on-year 26.5%, gross profit +32.4%, and revenue from the home life and culture education business increased 123%/32% respectively over the same period last year.
3) The technology business is poised to start. The company provides a global platform and two major smart property products to the government, community and property enterprises, and provides integrated solution services for pre-planning, smart hardware construction and digital system development and operation. The service customers have covered some of the top 100 property enterprises and small and medium-sized property enterprises; in the first half of the year, it has achieved revenue of 210 million yuan, with a gross profit margin of 36.6%; the company has established a leading edge in the field of property technology. In the context of the continuous promotion of smart community construction and the digital transformation of property enterprises, the technology sector opens up space for future growth.
Profit forecast, valuation and rating: The company's core business is steady, its ability to develop independently and expand is the benchmark in the industry. The profit structure was optimized in the first half of the year, the gross margin of the property management business stabilized, and park services recovered steadily. Due to revenue and profit structure adjustments, and considering the impact of non-operating factors in 2023, we adjusted the company's net profit forecast for 2023-2025 to 6.9/8.5 billion yuan. The corresponding EPS is 0.21 (original 0.22) /0.26/0.30 yuan. The current stock price corresponds to PE 17/14/12 times, and the company's long-term The development is improving and the “buy” rating is maintained.
Risk warning: Increased market competition has led to outgrowth falling short of expectations, and economic recovery and real estate recovery falling short of expectations.