Events. The company publishes its 2020 annual report. During the reporting period, the company achieved operating income of 739 million yuan, down 10.06% from the same period last year; the net profit belonging to shareholders of listed companies was 156 million yuan, down 12.78% from the same period last year. The company pays a cash dividend of 2.2 yuan (including tax) to all shareholders for every 10 shares. Considering that before the report, the company has completed the payment of a cash dividend of 3.8 yuan (including tax) for every 10 shares, the total cash dividend for every 10 shares in 2020 is 6 yuan (including tax).
The operating income in 2020 was 82.7 million yuan lower than that in 2019, mainly due to: first, some houses in the cross-border creative park were demolished and rebuilt, and the operating income was reduced by about 43 million yuan; second, the rent reduction for state-owned owners has been implemented for the whole year; third, the epidemic and macroeconomic changes have had a certain impact on the overall rental rate of the company, which has basically recovered.
The net profit attributed to the shareholders of the company decreased by 22.88 million yuan in 2020 compared with 2019, mainly due to:
First, the new project Jindu Road project, Hongan Mansion project is still in the climbing period affected by the epidemic, the project cost increased year-on-year, a loss of about 20 million yuan; second, the decline in operating income led to a decline in gross profit.
According to the 2020 annual report, the company's business model mainly includes leasing operation, shareholding operation and entrusted operation. By the end of the reporting period, the company had 25 projects leased and operated, with a property area of about 570000 square meters available for rental operation; two projects operated by the company and a property area of about 80,000 square meters available for rental operation; the company has 37 entrusted projects with a property area of about 230000 square meters available for rental operation.
During the reporting period, the company signed the Shanghai Liuzhou Road Qin Holiday Hotel project with an area of about 7000 square meters, and won the bid for Shanghai Puhuitang Road Shenhang Building project with an area of about 3600 square meters. The "entrusted operation" mode is used to manage 30 projects of Shengxu real estate related companies in Shanghai and Beijing, covering an area of about 150000 square meters. Actively promote mergers and acquisitions, in December 2020, the company signed a "letter of intent" with Yicheng Creative, and the company planned to acquire shares in related companies, which opened the prelude to mergers and acquisitions after the listing of the company.
Investment suggestion: to create China's leading commercial property value chain integrated service provider in the field of urban renewal, with a rating of "better than the big market". While the company continues to cultivate the Shanghai market, vigorously develop the Beijing market, and actively develop the core cities in the Yangtze River Delta and other core provincial capitals, through the flexible use of new project investment, management output, shareholding operation, mergers and acquisitions and other business expansion methods, to seek more development opportunities in the national market.
We estimate that the EPS of the company from 2021 to 2022 will be 0.41 yuan and 0.49 yuan respectively. Referring to similar comparable companies and considering that the company belongs to new shares, the company is given a dynamic price-to-earnings ratio of 22-28 times in 2021, and the corresponding reasonable value range is 9.02 yuan to 11.48 yuan, maintaining the "better than the market" investment rating.
Risk tips. The risk of decreasing rental rate and rent difference; the risk of over-concentration in the region; the risk that the project expansion is not as expected.