The net profit of homing in 2020 is close to the upper limit of the performance forecast, and the "buy" rating is maintained. The company realized revenue / net profit of 2829,000,000 yuan in 2020, an increase of 29,186% over the same period last year. The net profit of homing is close to the upper limit of the performance forecast (341-381 million yuan). The rapid growth of performance is mainly due to the contribution income of new projects entering the operation period and the increase of gross profit margin of stock project optimization management. Preferential policies during the epidemic further thickened profits. The company has ploughed the sanitation industry for nearly 20 years, has rich project management experience and unique understanding of the industry, has been the first to layout the "city butler" since listing, and high-quality large orders have landed one after another. We estimate that the company's EPS for 2021-2023 will be 0.94 EPS 1.24max 1.65 yuan, giving the 2021 25x target PE, a target price of 23.50 yuan, maintaining a "buy" rating.
The revenue structure has been continuously optimized, refined and intelligent management to improve project profitability. In 2020, the company's revenue increased by 29% compared with the same period last year, due to the fact that the new bid-winning projects have entered the operation period one after another. The gross profit margin increased by 5.5pct to 23.9% compared with the same period last year, mainly due to 1) the preferential policy of social security waiver or halving during the epidemic, 2) the salary expenditure of project managers was adjusted from cost to management expenses (the rate of management expenses was from + 3.4pct to 9.4% compared with the same period last year), and 3) fine and intelligent management promoted the improvement of project operation efficiency. Other income in 2020 is 166 million yuan, mainly including value-added tax discount of 163 million yuan during the epidemic. The company is based in Guangdong and radiates the whole country. in 2020, the proportion of income in South China has dropped to 50% compared with the same period last year, and the income structure has been continuously optimized.
The release of market-oriented orders for sanitation services is accelerated, and the market size in 21-25 is estimated to be CAGR 15%. According to the statistics of E20, the annual contract amount of new bid opening projects for sanitation services in China in 2020 is more than 67 billion yuan, an increase of 27% over the same period last year. According to our estimates, the market size of China's sanitation operation in 2020 is 327.5 billion yuan, of which the scale of the third-party operation is 178.7 billion yuan, the proportion corresponding to the third-party operation is about 55%. Compared with the 80% sanitation market rate in the United States and other developed countries, there is still nearly half room for improvement. We expect that the scale of China's sanitation third-party operation will exceed 360 billion yuan in 2025 (15% CAGR in 2021-2025), and the sanitation market rate will increase to 80%. Qiaobin Co., Ltd. has nearly 20 years of experience in sanitation management, and has preemptively laid out the "city butler" since its listing, complying with the development trend of the industry, and is expected to consolidate its leading position in the process of rapid expansion of the industry.
Maintain a "buy" rating with a target price of 23.50 yuan
We are optimistic about the improvement of economic benefits brought about by the company's fine and intelligent management, so we increase the company's gross profit for 21-22 years, and then adjust the forecast of return net profit to 384 million yuan (previous value: 370 / 493 million yuan). The introduction of 23 return net profit is 675 million yuan, corresponding to the 21-23 year EPS is 0.94 pound 1.24max 1.65 yuan. With reference to the average PE of comparable company's 21-year Wind consensus expectation of 18x, considering that the company's ROE is higher than the industry average and the growth prospect is promising, we can enjoy a certain premium and give the 21-year target PE 25x, corresponding to the target price of 23.50 yuan (the previous value is 28.64 yuan), to maintain the "buy".
Risk hint: the progress of sanitation marketization is not as expected, and the intensification of project competition affects the profit prospect.