Profitability increased year-on-year, managed area grew steadily, and maintained a “buy” rating

Greentown Services announced 2024 interim results. The company's revenue and profit increased, profitability increased year-on-year, the property service sector continued to grow in management area, sufficient reserve area, and the park services, consulting services and technology service businesses developed collaboratively and steadily. We maintain our profit forecast. We expect the company's net profit to be 0.741, 0.895, and 1.018 billion yuan for 2024-2026, corresponding EPS of 0.23, 0.28, and 0.32 yuan. The PE corresponding to the current stock price is 12.1, 10.0, and 8.8 times, maintaining a “buy” rating.

Revenue and profit increased, gross margin and net margin increased year-on-year, and the company achieved revenue of 9.068 billion yuan in the first half of 2024, up 10.6% year on year; achieved core operating profit of 0.893 billion yuan, up 25.8% year on year; realized net profit to mother of 0.505 billion yuan, up 21.5% year on year; gross margin and net margin both increased 0.5 pct year on year to 19.2% and 5.8%, respectively. The increase in profitability was mainly due to the expansion of the company's business scale and improved management efficiency. Among them, the management expense ratio The year-on-year decrease was 0.6 pct; cash in hand was 3.03 billion yuan, down 33.2% from the end of 2023, and major time deposits increased to 1.28 billion yuan.

Steady ballast for property services and continuous expansion of management area

Thanks to the steady increase in management area, the company achieved property service revenue of 6.019 billion yuan in the first half of the year, accounting for 66.4% of main revenue, an increase of 14.6% year on year, and gross margin of +1.1 pct year on year to 14.9%. By the end of the first half of the year, the company's management area reached 0.482 billion square meters, a year-on-year increase of 16.2%; the reserve area was 0.358 billion square meters, a year-on-year decrease of 5.7%, mainly due to the company's withdrawal from projects with delivery risks in some non-core cities. Looking at the subregions, the company's management area and revenue share in Hangzhou was 17.2% and 33.2%, respectively, contributing significantly to revenue.

Collaborative development of park services, consulting services, and scientific and technological services

The company achieved park service revenue of 1.758 billion yuan in the first half of the year, with gross margin of -0.4 pct to 23.9% year on year, of which home living service revenue increased 21.1%; achieved consulting service revenue of 1.133 billion yuan, +5.3% year over year, and gross margin +2.0pct to 32.1% year over year, of which revenue from the construction industry and management consulting services was +5.9% year on year; achieved revenue from technology services 0.159 billion yuan, -25.5% year on year, gross profit margin Compared to +2.1pct to 38.7%, the decline in revenue was mainly due to the client's delay in execution of the contract, and the company also actively optimized the product structure. The company is expected to rely on the collaborative development of the four major sectors to achieve a double increase in revenue and profit.

Risk warning: Policy support falls short of expectations, industry sales recovery falls short of expectations, company financing falls short of expectations.