Company announcement for the third quarter of 2023: Revenue and profit have increased qualitatively, and the segmented business has been carried out in an orderly manner. From January to September 2023, the company achieved revenue of 10.856 billion yuan, an increase of 18.29% over the previous year. Among them, the property management business achieved revenue of 10.376 billion yuan, an increase of 17.16% over the previous year, mainly due to the growth of existing property management projects and the increase in newly expanded market-based property management projects; the asset management business achieved revenue of 458 million yuan, an increase of 40.73% over the previous year, mainly due to revenue growth brought about by the expansion of the scale of commercial operation projects managed by the company and rent relief for company-owned properties in the same period last year. From January to September 2023, the company's gross margin was 12.66%, up 0.76 percentage points from the same period in 2022, and the three expense ratios were 5.06%, down 0.28 percentage points from the same period in 2022. From January to September 2023, the company achieved net profit of 595 million yuan, an increase of 25.92% over the previous year; non-net profit withheld from the mother of 537 million yuan, an increase of 39.80% over the previous year.

The number of new contracts continues to grow, and the quality of outreach continues to improve. From January to September 2023, the property management business achieved a new annual contract value of 2,791 billion yuan, an increase of 14.86% over the previous year. Of these, the new annual contract amount for third-party projects was 2,458 billion yuan, and projects above 10 million yuan accounted for 54%. The amount of newly signed annual contracts for the expansion of the company's traditional projects increased 18% year on year, and the total annual contract amount for the total business increased 15% year on year, and a total of 5 joint ventures were set up in the first three quarters; the expansion of the non-residential sector continued to maintain its advantage, and the amount of newly signed annual contracts increased 17% year over year. Among them, business segments such as offices and schools all increased by more than 35% year on year.

Key regions contribute revenue, and the scale of the non-residential sector is impressive. By the end of September 2023, the number of projects under management reached 2,043, covering more than 130 cities across the country, with a management area of 333 million square meters. Shenzhen City, Guangdong Province (excluding Shenzhen), Shandong Province, Jiangsu Province, and Sichuan Province ranked in the top five in terms of revenue in the first three quarters, achieving a total revenue of 5.897 billion yuan and a management area of 180 million square meters. The scale of the non-residential business continues to expand. From January to September 2023, the company's non-residential business achieved a total basic property management revenue of 6.123 billion yuan, with a management area of 200 million square meters as of the end of September 2023.

The operation of value-added services is improving, and asset management is developing steadily. From January to September 2023, the company went to the Jiahui Mall to achieve a platform transaction volume of 750 million yuan. The gross margin increased by more than 2 percentage points over the same period last year, and the quality of operations reached a new level. As of the end of September 2023, the company was managing 65 commercial projects (including preparatory projects) with a management area of 3.74 million square meters, including 3 projects owned by the management company, 56 projects owned by the trustee management shareholder China Merchants Shekou, and 6 third-party brand export projects.

Investment advice: Maintain a “better than market” rating. We predict that the company's EPS in 2023 and 2024 will be 0.70 yuan and 0.88 yuan, respectively. Considering the company's growth rate and current fundamental development trend, we gave the company 25-30XPE in 2023, with a reasonable value range of 17.5 to 21 yuan.

Risk warning: The industry faces the risk of declining sales and falling short of expectations in policies