Summary of the report:
Event: on January 15, Binjiang Service issued a positive profit announcement, which is expected to increase its net profit by more than 70% in 2020 compared with the same period last year. The main reasons are: 1) the increase in the project and area under management; 2) the increase in the income of community value-added services and non-owner value-added services; and 3) the reduction of social security under the epidemic.
Binjiang Group's property management platform, deep ploughing long triangle, positioning high-end. Binjiang Service is the property management platform of Binjiang Group, one of the top 50 housing enterprises in China. It was established in Hangzhou in 1995. It is located in the Yangtze River Delta and has a high-end positioning. The average property management fee of 2020H1 is 4.23RMB / month / sqm. In mid-2020, the top 100 property services ranked 26th. As of June 30, 2020, the contracted / managed area was 3020,1681 million square meters, an increase of 28.2% respectively over the same period last year. The pipe area exceeds the average value of TOP51-100property enterprises, and the co-management ratio is 1.80, which is in the middle and upper reaches compared with the mainstream property enterprises.
The region is deeply ploughed and deeply benefits from the high-end trend of Hangzhou market. The company focuses on Hangzhou, based in Zhejiang, with the advantage of regional concentration. It is expected to benefit deeply from the high-end trend of the Hangzhou market.
Small and American regional target, policy is good for accelerating growth. The company is a high-quality regional small and beautiful property management company in the industry, the main highlights are 1) excellent service quality and word-of-mouth, positioning high-end, leading in the property fee industry; 2) focusing on Hangzhou, ploughing long triangle, giving full play to the advantage of scale, reducing cost and increasing efficiency, at the same time, it is expected to benefit from the high-end trend of Hangzhou market; 3) the superimposed area of quantity and price is ploughed, and the performance growth rate is eye-catching in recent years, and the profitability is leading in the same industry. 4) relying on the service and brand after listing, the ability of market extension has been verified. In addition, the Ministry of Housing and Construction and other ten ministries and commissions have recently issued favorable policies to encourage the expansion of quality companies, the market-oriented pricing of property fees and the expansion of diversified community value-added services, which are of great benefit to the industry. We believe that with its high-end positioning, high-quality service, high project intensity and strong regional brand, the company is expected to accelerate performance growth by accelerating scale expansion, raising property management fees and developing community value-added services.
Investment suggestion: we predict that the company's net return profit from 2020 to 2022 will be RMB 2.91 billion, with a year-on-year growth rate of + 92.0%, 32.3% and 42.1%, respectively, and the corresponding EPS will be RMB 0.80. 05 / 1.50. The current stock price corresponds to 2020-2022PE is 16.3512.36x9.70 times. Considering the company's high-end positioning, excellent service quality, high project intensity, strong regional brand and market-oriented extension ability, combined with recent policies, it once again emphasizes support for brand expansion, market pricing and community value-added service development, giving the target price of HK $24.79. The target price corresponding to 2020-2022PE is 26.5, 20.0 and 14.1 respectively, giving a buy rating.
Risk hint: the price increase of property management fee is not as expected; the competition in the third-party extension market is intensified.