The 2020 performance is in line with our expectations.
Haining Picheng announced its 2020 results: operating income was 1.433 billion yuan, up 0.8% from the same period last year; net profit from its mother was 195 million yuan, down 30.3% from the same period last year, which is basically in line with our expectations. Deducting non-net profit of 155 million yuan, down 39.5% from the same period last year, non-recurrent profit and loss mainly came from government subsidies, totaling 33.02 million yuan in 2020. On a quarterly basis, 2020Q1/Q2/Q3/Q4 revenue year-on-year is-22.1% Universe, 17.7%, 22.6%, 19.4%, net profit is-32.8%, 14.7%, 73.0%, 27.5%, and non-net profit is-32.6%, 18.9%, 98.2%, 70.4%, respectively. The profit end of the fourth quarter is still under pressure.
Development trend
1. Revenue in 2020 was basically the same as the same period last year, and revenue improved in the fourth quarter compared with the same period last year. The company's revenue increased by 0.8% in 2020, of which Q4 revenue grew by 19.4%, an improvement from the previous month. In terms of business, (1) the income from property rental decreased by 15.7% in 2020 compared with the same period last year, mainly because the company implemented policies related to rent reduction and property management fees under the influence of the epidemic; and (2) in terms of shops and supporting properties, the property sales of projects such as the small town market entrepreneurship park reached 454 million yuan in 2020, an increase of 65.3%. (3) the revenue of other businesses decreased by 6.6% in 2020 compared with the same period last year, of which the health industry, the second main business, continued to advance, and its revenue increased by 37.7%.
2. Profitability has declined and cost control has achieved certain results. The company's gross profit margin in 2020 was from-13ppt to 39.8% compared with the same period last year, mainly due to the carrying forward of property sales costs and the reduction of rent and property management income corresponding to fixed costs. On the expense side, the company continues to strengthen cost control. During 2020, the expense rate is from-2.6ppt to 15.6%; the sales expense rate is from-1.2ppt to 8.8%; the management expense rate is from-0.9ppt to 7.3%; and the financial expense rate is from-0.5ppt to-0.5%. Under the combined influence, the net interest rate in 2020 is from-6.1ppt to 13.6%, and the non-net interest rate is from-7.2ppt to 10.8% year-on-year. The subsequent improvement in profitability needs to be observed.
3. Follow up to pay attention to the recovery of the company's main leather business and the progress of the transformation of the large health business. 1) Transformation and upgrading of main business: continuously optimize the layout of market formats, increase advantageous formats and reduce some formats; the company plans to accelerate the pace of online integration and continue to promote cooperation on platforms such as Taobao Live, Douyin, Kuaishou, etc., complete the construction of intelligent cloud warehouses in Tongxing and Xieqiao Park, expand the functions of self-built platforms, and create an e-commerce industry chain base that integrates e-commerce live broadcast, e-commerce supply, intelligent warehousing and logistics. 2) steady progress in the development of the great health cause: the company strengthens the construction of talent team, adds new business cooperation hospitals in Haining, establishes transfer channels and strives to improve business performance. Yihe Home docks with high-quality resources of rehabilitation hospitals, connects pension and medical services, promotes the construction of pension platform, and realizes the combination of medicine and care. Follow-up needs to continuously follow up the company's main business recovery and transformation effect.
Profit forecast and valuation
Maintain the profit forecast of 0.16 yuan per share in 2021 and introduce the profit forecast of 0.17 yuan per share in 2022. The current share price corresponds to a price-to-earnings ratio of 26x / 24x in 2022. Maintain a neutral rating and target price of 4.33 yuan, corresponding to 27 times Pmax E in 2021 and 26 times Pamp E in 2022, with 7.4% room for increase.
Risk
Competition in the industry continues to intensify, online transactions are diverted, and the progress of the big health business is not as expected.