Main points of investment
The year-on-year net profit increased by 184.7% compared with the same period last year: the company's 2020 operating income was 10.509 billion yuan, up 43.3% over the same period last year; gross profit was 4.006 billion yuan, up 128.3% over the same period last year; and net profit from home was 2.648 billion yuan, an increase of 184.7% over the same period last year. The company's comprehensive gross profit margin was 38.1%, an increase of 14.2 percentage points over the previous year, and the net return rate was 25.2%, an increase of 12.5 percentage points over the previous year. The company's annual performance is in line with expectations.
The gross profit margin of each business continues to rise: in 2020, the proportion of income from the company's property management services, non-owner value-added services and community value-added services was 60.2%, 27.8% and 12.0% respectively, and the gross profit contribution was 52.9%, 27.0% and 20.0% respectively. The business structure is reasonable. Benefiting from the company's standardized operation and measures to reduce costs and increase efficiency, the gross profit margins of property management services, non-owner value-added services and community value-added services were 33.6%, 37.1% and 63.4% respectively in 2020, an increase of 15.9%, 8.7% and 6.0% respectively over 2019.
The scale of management is growing rapidly and third-party expansion is in force: by the end of 2020, the area of management and contract of the company is about 300 million square meters and 565 million square meters respectively, an increase of 26.05% and 11.88% respectively over the same period last year.
Since 2021, the company has issued Rio Tinto and received mergers and acquisitions. As of 2021M2, the area under management of the third party of the company has increased rapidly from 10 million square meters at the end of 2020 to 130 million square meters, with a total area of 413 million square meters, meeting the target of 68.8 percent of the area under management in 2021.
Our point of view: China Evergrande, the related party of the company, has strong strength, rich government and enterprise resources, has a land reserve of more than 200 million square meters, and the company's performance growth has high certainty. The executive force of the management of the company is strong, and the third-party expansion starts late, but it is growing rapidly. It is expected to realize the rapid expansion of multiple formats through mergers and acquisitions of different forms of property management enterprises. With the company's technological empowerment, the landing of the intelligent property management system and the improvement of the penetration of high gross profit and multiple value-added services, the company's profit margin is also expected to improve. At present, the valuation of the company is lower than that of property management enterprises of the same size. in view of the leading position of Evergrande property and the strong certainty of high growth in the future, the valuation of the company is still in an attractive position.
Risk tips: business expansion is not as expected; property management satisfaction is reduced; property management fee collection rate is reduced; property management fee increase is blocked.
