Events:
On January 25, 2021, the company announced the development of its business. by the end of 2020, the area under management had exceeded 4000 square meters, nearly double that at the end of 2019, of which more than 50% came from independent third parties. At the same time, since its listing, the company has continued to land on mergers and acquisitions, successively acquiring 80 per cent of Guangzhou Runtong property and 80 per cent of Cedar Zhaopin, making the area under management more than 120 million square meters. As a result of the acquisition, the company expects to extend the area under management to the original target of 2021 and raise the target for the whole year of 2021 to 160 million square meters. The increment of the revised target will mainly come from the company's extension and merger and acquisition strategies, the supplement of the extension capability of acquired companies such as Cedar Zhaopin, and the continuous delivery of the Hejing Pacific project.
Comments:
Strong execution of M & An and reasonable consideration: within 3 months after the listing of the company, Guangzhou Runtong property and Cedar Zhilian received mergers and acquisitions with a total consideration of 1.53 billion yuan, with a total additional area of about 9312 million square meters. as a result, the total managed area of the company has exceeded 120 million square meters and the original target of 2021 has been achieved at the beginning of 2021. The PE of Guangzhou Runtong property and Cedar Zhaopin in 2020 is 11.65 and 12 times respectively, and the average PE of the property management industry in the secondary market is 38.3 times. The M & A consideration of the company is much lower than that of the secondary market, which is more reasonable.
With the development of third-party bidding, Cedar Zhaopin is expected to become an important supplement to Outsourcing: in 2021, the company will increase its management area target to 160 million square meters, an increase of about 3400 square meters over the current scale, of which 50 per cent will come from Outsourcing. The company implements the all-staff extension incentive mechanism, which immediately rewards a certain proportion of the annual saturated income of the extension contract to the relevant personnel. The front-line staff of the company have sufficient extension motivation and sufficient sources of extension projects. In addition, Cedar Intelligence Alliance has nearly 10 years of experience in the bidding market. The Greater Bay area, the Yangtze River Delta, the Midwest and the Bohai Sea are the key layout areas of Cedar Intelligence Alliance, and the regional layout of Hejing is highly coincident with each other. It is an important supplement to Hejing's leisurely extension ability.
Multi-format layout, open the market space: public construction properties such as hospitals, schools and high-speed rail stations have a license threshold for cleaning and security services, and the acquisition of Guangzhou Runtong property and Cedar Zhilian not only complements the scale of Hejing's public construction format, but also makes Hejing leisurely directly obtain the qualifications to compete for public construction and urban service projects, opening up the market space.
Commercial light asset output is expected to achieve rapid expansion: the company has integrated business operation capabilities from design, preparation, investment to operation, and will undertake commercial property management and operation projects from third parties through the light asset export mode. At present, the company has signed a commercial light asset export project, which is expected to open in 2021, and about 10 commercial light asset export projects are expected to be converted into contracted projects this year.
Our point of view: the company's acquisition of Cedar Zhaopin, a rapid jump in scale, reflecting a strong executive force.
The company aims to manage an area of 300 million square meters in 2024, and its CAGR will reach 65% in 2020-2024. In the future, the company is expected to achieve sustained scale growth in multi-channels, multi-formats and multi-fields through external development, acquisition, merger and acquisition and the delivery of Hejing Pacific. In addition, the company has integrated business operation capabilities, related party reserve projects include 16 shopping centers and 6 office buildings, third-party project resources are sufficient, commercial property management and operation business growth and strong certainty. The company is expected to become a general standard for Hong Kong stocks in March this year. Investors are advised to pay active attention to it.
Risk tips: business expansion and acquisitions are not as expected; property management fees are blocked; collection rate is not as expected; value-added business development is not as expected.