Event
The World Federation Bank intends to transfer its 100% equity and all corresponding rights and interests to Huayan Zhihui after the asset reorganization, at a transfer price of 530 million yuan. After the completion of the share conversion agreement, the World Union Bank intends to transfer the shares of 43 subsidiary companies held by the World Union House, with a transaction price of 220 million yuan.
Brief comment
Dahengqin gave full support to the company and successfully divested the chartered apartment project. The company transferred its 100% stake in the World Union House to Huayan Zhihui at a price of 530 million yuan, and then transferred the shares of 43 sub-companies held by the World Union House at a price of 220 million yuan. World Union House is the main body of the company's long-term rental apartment business, and its operation mode mainly includes charter mode and entrustment mode. The essence of this transaction can be considered that the company sold the chartered apartment project at a price of 310 million yuan. It is worth noting that the conclusion of the deal is closely related to the support of Ohengqin. DaHengqin Innovation, a wholly owned subsidiary of Dahengqin, and Hua Yan Zhihui jointly set up Huaqin Industry to undertake all the rights and obligations of the World Federation House transferred by Hua Yan Zhihui. Among them, DaHengqin Innovation subscribed 49.5% of the contribution share of Huaqin Industry. With the support of DaHengqin, the company was able to divest its assets and move forward light. We believe that the promotion and development of DaHengqin to the company's operation and development are continuing to be realized.
Light to focus on professional services, loss-making business to improve the current performance. After Dahengqin joined the company, the company has clearly constructed the business embodiment of the dual-core coordinated development of "big deal + big asset management", focusing on superior business and giving full play to the company's strengths. The "big asset management" business returns to the professional service ability of light assets, and the long-term rental apartment business also focuses on the entrusted management mode of charging management service fees. In the past, because the apartment project of charter mode needed to be decorated, its depreciation and amortization brought greater profit pressure to the company. The World Union House lost 320 million yuan in 2019 and 210 million yuan in the first three quarters of 2020, which is a big drag on the company's performance. With the transfer of the equity of World Union House, the company has not only successfully stripped off the chartered apartment project, but also retained all the intellectual property rights accumulated during the development of World Union House, including trademark, software copyright and domain name, etc. there is still a deep foundation for the long-term rental apartment project which focuses on the entrustment model in the future. Financially, this transaction will have a positive impact on the company's current performance, and according to estimates, the impact on the company's net profit is 65 million to 75 million yuan.
Maintain the buy rating. Taking into account the improvement in asset management and operations, as well as the return on investment from asset disposal, we have raised the company's EPS to 0.08 and 0.18 in 2020-2022 (the original forecast was 0.06).
Risk hint: the decline of trading services is higher than expected; the development of property management is lower than expected.