On March 30th, at the 2020 results conference, China Resources Vientiane Life (01209) handed in a beautiful "report card".

How beautiful is this report card?

In terms of operating performance, in 2020, the company achieved revenue of 6.779 billion yuan, an increase of 15.5% over the same period last year; net profit of 818 million yuan, a year-on-year increase of 124.1%; and core net profit increased significantly, rising 148% to 816 million yuan over the same period last year. At the same time, its profit level also increased sharply-during the period, the gross profit was 1.827 billion yuan, an increase of 93.9% over the same period last year, while the gross profit margin increased by nearly 11 points to 27.0% compared with the same period in 2019.

It is not difficult to see that, as a new property stock that has just landed in the capital market, China Resources Vientiane Life relies on the market scarce "big property management" light asset operation platform, this "report card" is indeed very eye-catching.

However, from the shallow to the deep, from the surface to the inside, the fact that China Resources Vientiane's life has achieved such a great growth is not only the benefit of the rise of the property management industry, but there are probably more considerations behind it.

"Business Management + property Management" two-wheel drive, with a substantial increase in performance.

It is reported that China Resources Vientiane Life was founded in 2017, is the industry's rare "full-format" large property management listed company, behind the parent company is a strong China Resources Land.

Under the protection of "Dashu" China Resources Land, China Resources Vientiane Life has become one of the "leaders" in the industry in just a few years: in 2019, the company ranked fifth in terms of property management service income; in terms of shopping mall property management service income, it ranked second.

From the perspective of business structure, China Resources Vientiane Life mainly implements the two-wheel co-drive operation mode of "residential property management + commercial operation and property management".

Specifically, its business is mainly divided into two parts: residential property services and commercial operations and property management services. Among them, residential property management services are mainly aimed at residential and a small number of other non-commercial properties (such as stadiums, parks, etc.), while commercial operations and property management services are mainly aimed at shopping centers and office buildings. At present, with the help of the resources and management experience of large-scale commercial complex, China Resources Vientiane Life has created an integrated service platform, forming a multi-format synergy effect of residential, shopping malls and office buildings.

(photo Source: southwest Securities)

If we take a closer look at this financial report, it is not difficult to find that the increase in the performance of China Resources Vientiane Life is mainly due to the twin-engine growth of the "residential + commercial" model, as follows:

On the one hand, residential property management income continues to play a "pillar" role, and the contribution of community value-added service income is significantly increased.

According to the financial report, in 2020, the income of its residential property management services is about 3.884 billion yuan in 2020, an increase of 12% over the same period last year, accounting for 57.3% of the total income, making it the main source of income for Vientiane living in 2020. The gross profit was 617 million yuan, up 47% from the same period last year; the gross profit margin was 15.9%, up 3.8 pct over the previous year, mainly due to factors such as the increase in the number of projects with high property rates and the reduction of social security fees due to the epidemic.

From the perspective of the split business structure, the company's residential property management services mainly cover three subdivisions: property management services, developer value-added services and community value-added services. During the period, the income of its community value-added services (residential property management services) increased from 8.6% in 2019 to 10% in 2020. What can be seen is that as the proportion of community value-added services with a higher gross profit margin has increased, the company's profitability is expected to improve accordingly. On the other hand, Vientiane Life mainly ploughs the economically developed areas of first-and second-tier cities, and high consumption power owners are expected to promote them to unleash more growth potential in the future.

On the other hand, commercial operation and property management services are developing rapidly and are expected to gradually become a major source of profits in the near future.

In 2020, the income of business operation and property management services of China Resources Vientiane Life reached 2.895 billion yuan, an increase of 21% over the same period last year, accounting for 42.7% of the total revenue, with a gross profit of 1.21 billion yuan and a gross profit margin of 41.8%. From the perspective of business format, the income from commercial operation and property management services from shopping malls is about 1.812 billion yuan, an increase of 16.3% over the same period last year, while that from office buildings is about 1.083 billion yuan, an increase of 29.3% over the same period last year.

As can be seen from the above data, compared with the steady growth of residential property management, the commercial operation and property management services of China Resources Vientiane Life are showing a rapid growth trend-the proportion of commercial operation and property management services has increased to 42.7%. The gap is gradually narrowed, and the gross profit margin of 41.8% is also significantly higher than that of residential property management. With the gradual advantages of commercial brands and the promotion of light asset export strategy, it is expected that its commercial service business will gradually become the main source of profit for Vientiane life in the near future.

"Endogenous extension" two-way expansion, the scale continues to expand steadily

It has to be said that behind the great increase in the operating performance of China Resources Vientiane is also the sharp rise in the scale of its management.

According to the financial report, in 2020, the company's residential property management services were distributed in 79 cities, with a management area of more than 100 million square meters, or 107 million square meters. The commercial operation service has opened a shopping center floor area of 6.1 million square meters, layout of 56 cities; has opened office space of 1.5 million square meters, the layout of 37 cities.

After careful study, it is not difficult to find that the continuous expansion of the management scale of China Resources Vientiane is mainly due to its "endogenous extension" strategy.

In terms of endogenesis, the project delivery of China Resources, especially China Resources Land, provides strong support for China Resources Vientiane life.

Zhitong Financial APP learned that China Resources Land has maintained the top 10 real estate sales all the year round, and its sales scale has maintained steady growth in recent years. By 2020, it had achieved a contract sales area of 14.187 million square meters, an increase of 7.1 per cent over the same period last year. At the same time, during the period, the cumulative land storage area of China Resources Land is 68.09 million square meters, and the land storage area of rights and interests is 48.01 million square meters, which can ensure its development in the next three to five years. It can be seen that the continuous delivery of parent company projects has become the main driving force for the growth of China Resources Vientiane living in the tube area.

In terms of extension, China Resources Vientiane Life is still increasing efforts to expand, or will promote the expansion of business to become a new business pillar.

Specifically, with the help of the good reputation established by good service and the external expansion of China Resources's brand advantages, the proportion of income of China Resources Vientiane living from independent third parties has greatly increased: during the reporting period, its full-format property management area is 119 million square meters, up 18% from the same period last year, and the proportion of third parties in tube area increased to 23.7%. What we can see is that with the increase of the proportion of its third party in the management area, its external business expansion is expected to become another pillar of the company in the future.

The management of the company said bluntly at the performance meeting that since its listing, China Resources Vientiane Life has obviously stepped up its efforts to expand outside: from the beginning of January 2020 to before listing, in urban services, integrated facilities management, local government platform cooperation, China Resources Group collaborative business expansion of 2.76 million square meters, 650000 square meters, 30, 000 square meters and 770000 square meters respectively. After listing to the end of February, the expansion area of the above business was 3.97 million square meters, 230000 square meters, 2 million square meters and 710000 square meters.

In addition to the above-mentioned "endogenous extension" layout, China Resources Vientiane Life also enters urban services by expanding service boundaries. In July 2020, the company successively signed two city service projects: "Shenzhen Hewan tributary Transportation and maintenance Project (Jiuhe two reservoirs Project)" and "Fuzhou Gulou Wisdom City Operation Project". "Shenzhen River Bay tributary Transportation and maintenance Project" provides comprehensive management services to promote the construction of the water park city. "Fuzhou Gulou Smart City Operation Project" provides urban management and operation for Gulou District, including district property renovation and management, building property management, urban value-added services, etc. It is not difficult to find that with the continuous acceleration of the layout of new areas of urban operation services, it is expected to further open up the space for growth.

It is worth mentioning that at a time when the scale of life management in China Resources Vientiane is constantly expanding, the company has also put forward the "14th five-year" strategic five-year plan.

The company said it hopes to have a management area of 400 million square meters by the end of 2025, of which the third-party extension will account for 50 percent of the area, reaching 200 million square meters. On the commercial side, it is hoped that by the end of 2025, the number of shopping malls will reach 150 and the number of outbound shopping malls will reach 50.

On the whole, combined with the number of projects waiting for opening in China Resources, the independent expansion of China Resources Vientiane Life itself, and the new soil storage projects of China Resources Land in the future, there is good reason to believe that it is a high probability event that the number of stores managed by China Resources Vientiane will reach 150 by the end of 2025.

Around the three major competitive advantages, where is the growth potential?

If the sustained growth of the above scale is the current growth momentum of China Resources Vientiane Life, then where is its future growth?

Combined with the relevant data, we may be able to see some clues:

1, focus on high-end and quality track, invisible form constitutes the brand effect, promoting the further expansion of customer resources.

It is reported that China Resources Vientiane Life mainly has three major commercial product brands: "Vientiane City", "Vientiane World" and "Vientiane City". Among them, Vientiane City is the company's high-end brand, which aims at middle and high-end customers and lays out the core areas of first-and second-tier cities, positioning the city's landmark shopping centers; Vientiane is aimed at young people and families, laying out first-and second-tier urban regional centers or third-tier urban core areas, positioning high-quality living business centers.

Compared with its competitors, the company is the largest domestic partner of international brands, especially in luxury goods, China Resources Vientiane City is one of the few domestic brands favored by foreign luxury goods. By 2020, it has the largest number of luxury shopping centers in the country. Based on this extensive and high-quality tenant resource recognition, the company can virtually establish a moat effect, forming a strong competitive advantage, which will reverse the further expansion of its customer resources.

2. With the empowerment of science and technology, the ecosystem of large members will glow with greater growth momentum.

It is understood that the China Resources Vientiane life membership system mainly includes the shopping mall "one point Vientiane" membership system, residential property "Yuejia" owner APP and office "Officeasy" Mini Program membership system. In these member systems, around the four dimensions of operation digitization, data capitalization, production science and technology, and spatial intelligence, science and technology can help improve operation efficiency and reduce costs, and further release data value through the data precipitation and application of the whole chain.

What can be seen is that the vitality of the company's big member ecosystem has been gradually released through scientific and technological empowerment to achieve efficiency and maximization-by December 31, 2020, the number of APP members of Vientiane has exceeded 13.4 million, an increase of 16%. In 2020, the number of overlapping people of "one Vientiane" APP and residential "Yuejia" APP increased by 53% compared with the same period last year, and the per capita annual consumption of overlapping members increased by 25% over the same period last year. The intelligent society of about 50 projects landed and obtained a number of invention patents.

3. Deep ploughing first-and second-tier cities, there is relatively large room for property fees to increase prices.

According to the latest financial report, by the end of 2020, China Resources Vientiane's living business had expanded to 69 cities, covering six regions: North China, South China, West China, Central China, East China and Northeast China. Of these, 79% of managed residential properties and 76% of managed commercial properties are located in first-and second-tier cities.

From a deeper point of view, focusing on first-and second-tier cities can obtain a group of owners with higher consumption power, and property fees have relatively greater room for improvement, and at the same time, it is also more conducive to the development of diversified value-added services. the company occupies the third place in the residential property management market in first-and second-tier cities, and the leading advantage is significant.

From the above point of view, it is not difficult to find that the growth space created under multiple advantages is the main momentum for the future performance growth of China Resources Vientiane Life. Based on this growth momentum, the company is expected to continue to play the "strong Hengqiang" Matthew effect in the industry and become a high-quality stock worthy of long-term attention.