The pre-growth in 2020 exceeded expectations by more than 80%. The company issued a positive profit forecast, and it is expected that the profit attributable to shareholders of the company for the whole of 2020 will increase by more than 80% year on year (corresponding to 421 million yuan), exceeding market expectations. The main reasons for the rapid growth of the company's performance are: 1) the substantial increase in management area and the increase in income from value-added services; 2) the substantial increase in the number of registered users of Jianye + platform and the rapid increase in income in the life services sector; 3) the company continues to improve quality and efficiency, as a result of the continuous reduction of management expenses.
With the rapid expansion of management and contract area, related real estate is also expected to contribute to a stable increase in the future. By the end of 2020, the scale of the company's management and contract area was 1.00 million million square meters respectively, an increase of 0.43 million square meters over 2019; the newly added area from affiliated companies and third parties was 0.17 million square meters respectively, and the contract area from related companies and third parties was 0.1755 million square meters respectively, and the management scale achieved high-speed expansion. The affiliated company Jianye Real Estate (including light asset construction projects) achieved a sales area of 1460 million square meters in 2020, an increase of 1.8 percent over the same period last year, and sales volume of 102.6 billion yuan, an increase of 1.5 percent over the same period last year. By the end of June 2020, the land reserve of Jianye Real Estate has reached 5265 million square meters, and it is expected that the continuous delivery of related companies will contribute a stable incremental area.
The extension of marketization continues to increase, and the layout outside the province begins to accelerate. In addition to the delivery of affiliated companies, the company also relies on its regional influence in Henan Province to continue to make market-oriented extension, excluding the company's acquisition of Jiyuan Zhonggang and Hebei Taihua Jinye project. it is estimated that the company's additional management / contract area through market-oriented bidding in 2020 will be about 0.12 million square meters. At the end of December 2020, the company acquired a 51% stake in Taihua Jinye with a transaction consideration of 100 million yuan. Taihua Jinye's management project is mainly located in Hengshui City, Hebei Province. As of the end of August 2020, Taihua Jinye's management / contract area is respectively 938 yuan 12.48 million square meters. Through the further layout of the acquisition company outside the province, it is expected to continue to increase the project density in Hebei region in the future.
Jianye + platform registered users and GMV continue the strong trend. With the support of Jianye Group, the type of life service of the company continues to extend, and the scope of service continues to expand. Relying on the market influence in Henan region, the company has established a Jianye + life service platform covering online and offline life service system. From January to December 2020, Jianye + platform added 1.49 million registered users, an increase of 30.3% over the same period last year; the total GMV for the whole year totaled 780 million yuan, a substantial increase of 83.9% over the same period last year, of which the GMV from Jianye owners / non-construction owners was RMB 580 million respectively. It is expected that as the company continues to expand its coverage of users, Jianye + platform GMV is expected to continue to grow rapidly in the future.
Investment suggestion: we predict that the company's return net profit from 2020 to 2022 will be RMB 5.9 trillion, an increase of 79.8%, 40.5% and 37.2%, respectively, with a corresponding EPS of 0.33, 0.47 and 0.65 yuan, respectively, and a CAGR of 51.3% in 2020-2022. The company's share price corresponds to 18.5 PE of 13.1 PE in 2020-2022, respectively. Taking into account the company's good growth and low valuation level, the company is given a target price of HK $14.0 (corresponding to 25 times PE in 2021), maintaining a "buy" rating.
Risk hint: the growth rate of Jianye real estate slows down or delivers less than expected risk, the growth of third-party extension is less than expected risk, and the relatively low collection rate of property fees may lead to the risk of impairment of receivables.