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绿城服务(2869.HK):业绩表现优异 盈利能力向好

Greentown Services (2869.HK): Excellent performance, improving profitability

中信建投證券 ·  Aug 25

Core views

The company achieved operating income of 9.07 billion yuan in the first half of 2024, an increase of 10.6% over the previous year; net profit to mother was 0.5 billion yuan, an increase of 21.5% over the previous year. The main reasons why the growth rate of net profit due to the period was higher than the revenue growth rate: 1. Increased gross margin; 2. Decreased management expense ratio. By the end of the first half of the year, the management area of the company's property management business reached 0.48 billion square meters, an increase of 16.2% over the previous year, making it the leading position in the industry. The gross margin of the property management sector was 14.9%, up 1.1 percentage points from the same period last year. The expansion strategy is deeply involved in East China's layout throughout the country. The East China project accounted for 59.6% of the area managed during the period, an increase of 0.5 percentage points over the same period last year.

occurrences

The company announced its 2024 interim results. In the first half of the year, it achieved operating income of 9.07 billion yuan, an increase of 10.6% year on year; achieved core operating profit of 0.89 billion yuan, an increase of 25.7% year on year; and achieved net profit of 0.5 billion yuan to mother, an increase of 21.5% year on year.

Brief review

Outstanding performance and excellent profitability. In the first half of 2024, the company achieved operating income of 9.07 billion yuan, an increase of 10.6% year on year; achieved core operating profit of 0.89 billion yuan, an increase of 25.7% year on year; achieved net profit of 0.5 billion yuan to mother, an increase of 21.5% year on year. The main reasons for the growth rate of net profit to the mother were higher than the revenue growth rate: 1) Focusing on refined management, the comprehensive gross margin for the first half of the year was 19.2%, an increase of 0.5 percentage points over the previous year; 2) Effective cost control, the management expense ratio for the first half of the year was 7.6%, down 0.6 percentage points from the same period last year.

Property management area continues to grow, focusing on qualitative expansion in East China. In the first half of the year, the company's property management business revenue reached 6.02 billion yuan, up 14.6% year on year, accounting for 66.4% of revenue; gross margin was 14.9%, up 1.1 percentage points from the same period last year. As of the end of the first half of the year, the company's property management area was 0.48 billion square meters, an increase of 16.2% over the previous year; the property management contract area was 0.36 billion square meters, the joint management ratio was 1.74, and reserves were abundant. The company is deeply involved in the East China layout. The East China project accounts for 59.6% of the management area, an increase of 0.5 percentage points over the same period last year.

Currently, the number of projects under management has reached 3,356, covering 203 cities across the country.

Revenue from park services and consulting services increased year-on-year, and revenue from technology services declined due to the impact of the real estate industry. In the first half of the year, the company's park services achieved revenue of 1.76 billion yuan, an increase of 6.1% over the previous year. Among them, the proportion of park products and services, home living services, and cultural education services increased; gross margin was 23.9%, down 0.4 percentage points from the same period last year. Consulting services achieved revenue of 1.13 billion yuan in the first half of the year, up 5.3% year on year; gross margin was 32.1%, up 2.0 percentage points from the same period last year. Technology services achieved revenue of 0.16 billion yuan in the first half of the year, a year-on-year decrease of 23.8%, mainly affected by the domestic market environment and the real estate industry environment; gross margin was 38.7%, an increase of 2.1 percentage points over the same period last year.

Maintain profit forecasts and buy ratings. We forecast the company's EPS for 2024-2026 to be 0.22/0.25/0.27 yuan, respectively. The company's multi-sector business grew steadily, and its performance continued to improve, maintaining the purchase rating and target price of HK$4.04 unchanged.

Risk analysis

1) The property management industry where the company is located is currently facing fierce industry competition. In the future, the company may not be able to win enough bids due to increased competition, leading to a slowdown in the growth rate of third-party property management space.

2) The company's gross margin is under pressure. The property fees charged by the company are basically constant, and price adjustments are relatively difficult, but the company needs to face rising labor costs every year. If the company cannot continue to improve management efficiency and use technological means to save labor, the company will face downward pressure on gross margin.

3) Non-operating factors continue to affect the company's profit release. As the cornerstone investor of Binjiang Service, the company holds less than 5% of Binjiang Service's shares. Since this portion is calculated at fair value, its annual value will be adjusted according to changes in Binjiang Service's stock price and will continue to affect the company's profits in the future; in addition, if the company continues to accrue accounts receivable and other receivables impairment preparations, it will also have an impact on the company's profit side performance.

The translation is provided by third-party software.


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