Event: Ya Life Service's mid-year revenue in 2023 +1%, net profit for Gimo - 21%
Ya Life Services announced its 2023 interim results announcement. During the period, it achieved revenue of 7.7 billion yuan, a year-on-year increase of 1%, gross profit of 1.57 billion yuan, a year-on-year decrease of 23.3%, a gross profit margin of 20.4%, a year-on-year decline of 6.5 pct; net profit of 84 million yuan, a year-on-year decrease of 20.7%; EPS was 0.59 yuan, a year-on-year decrease of 21.3%; and declared an interim dividend of 0.025 yuan per share, with total dividends of 35.5 million yuan.
Comment: Outreach is leading the industry, the revenue structure continues to be optimized, and community life services are growing rapidly 1) Outreach is leading the industry, and the non-residential sector continues to gain strength. The company's management scale is in the first tier of the industry. As of June 30, 2023, the total management area was 580 million square meters, an increase of 29.6 million square meters over the end of 2022; the contract area was 760 million square meters, accounting for more than 80.6% of the contract area from third parties. In the first half of the year, the company expanded more than 30 million square meters of contract area through a third party, and continued to rank among the highest in the industry in terms of third party expansion area and contract amount for many months. In the current competitive market environment, the company focused on a city classification strategy and product brand strategy, with both scale and efficiency. More than 70% of the new projects added in the first half of the year were located in key cities.
By region, as of June 30, 2023, 33.9% of the company's administrative area was located in the Yangtze River Delta urban agglomeration, 18.8% in the Guangdong-Hong Kong-Macao Greater Bay Area, and the rest in the Shandong Peninsula urban agglomeration and the Chengdu-Chongqing urban agglomeration. In terms of business format, the company continued to gain strength in non-residential fields such as public construction, and the share of non-residential housing in the administrative area reached 57.3%.
2) The revenue structure continues to be optimized, and subsequent real estate impact is limited. In 2023H1, the company's basic property management/owners' value-added and urban service revenue increased 7%/8%/5% year on year, extrapolated value-added service revenue, which is highly correlated with real estate, decreased by 40% year on year, the share of total revenue decreased to 8% (2022H1 was 13%), and the share of gross profit decreased to 7% (2022H1 was 17%). The revenue and profit structure were clearly optimized. After adjustments, the impact of the real estate market on the company's business was limited, and the company is expected to return to a steady growth trajectory.
3) Demand from owners is recovering, and community living services are growing rapidly. Value-added services for the company's owners cover the four major sectors of community living, home improvement and home delivery, space operation and institutional value-added. Community lifestyle services include property maintenance, housekeeping services, community group purchases, etc., which are closely related to residents' lives, and demand is strong. 2023H1 community living service revenue increased 37% year-on-year, accounting for 49% of sector revenue. The company is expected to seize the potential for consumer consumption recovery, dig deeper into owners' needs, improve service stickiness, and community life services still have a lot of room for development.
Profit forecast, valuation and rating: The company's size is in the first tier of the industry, with excellent expansion performance and strong independent development capabilities. The real estate industry continues to adjust, which has an impact on value-added services and home improvement business for company developers; related parties' liquidity and related business receivables need further tracking. We adjusted the company's net profit forecast for 2023-2025 to 1.88 billion yuan (down 14%) /2.09 billion yuan (16% reduction) /2.31 billion yuan (15% reduction), corresponding to EPS of 1.32/147/1.62 billion yuan, respectively. The stock price corresponds to 2023-2025 PE 4 times/3 times. The valuation is attractive, and the “increase in holdings” rating is maintained.
Risk warning: The development of extrapolated value-added services fell short of expectations, and project repayment fell short of expectations.