Event: the company issued the 2020 annual performance report, won the bid Wugang rural sanitation integration project 1) April 15, 2021, the company released the 2020 performance report. During the reporting period, operating income reached 2.654 billion yuan, up 51.3 percent over the same period last year; net profit returned to the mother was 427 million yuan, up 82.3 percent over the same period last year; cash on hand was 2.22 billion yuan, up 279.2 percent over the same period last year; and the final dividend per share was 18 Hong Kong cents.
2) on April 19, 2021, the company official account said that it won the bid for the rural sanitation integration project in Wugang City, Henan Province, with a contract service period of six years, a contract turnover of about 88 million yuan, and a total service area of about 2.1 million square meters. including 4 towns, 3 townships and 3 streets in Wugang City.
Comments: business plate highlights frequently, diversified business coordination enhanced, steady expansion of services in the Central Plains 1) the company relies on regional advantages, the use of high visibility and reputation to speed up the expansion of third-party projects.
By the end of 2020, the company had managed 100 million square meters of construction area, an increase of 75.5% over the same period last year (of which the third-party construction area accounted for 45.1%, an increase of 14 pct over the same period last year); the contracted construction area was 187 million square meters, an increase of 62.7% over the same period last year; and the joint management ratio was about 1.87%.
2) the number of users and GMV of the consumer platform "Jianye +" are increasing rapidly. By the end of 2020, "Jianye +"
The total number of registered users of the platform was 3.67 million, an increase of 67.6% over the same period last year. Total platform merchandise trading (GMV) in 2020 was about 780 million yuan, an increase of 83.9% over the same period last year. Among them, the platform transaction volume of Jianye owners was about 580 million (accounting for 74.4%), and that of non-Jianye owners was about 200 million (25.6%), reflecting "Jianye +".
The platform has strong epitaxial penetration ability.
3) steadily expand the strategic development radius and serve the Central Plains. Jianye Group has implemented the "provincial" strategy for a long time, achieving full coverage of 122 cities above county level in the province in 2019. With the improvement of comprehensive strength and brand strength from 2020, the company will expand the strategic development radius to 500 kilometers out of Henan, serve the Great Central Plains, and deeply participate in the construction of new urbanization in central China. April 19 won the bid Wugang rural sanitation integration project, the project duration is longer, the amount of money is larger, the service area is more than 2 million square meters, and the speed of urban service expansion is improved.
4) plenty of cash on hand and generous dividends. By the end of 2020, the company had more than 2.2 billion cash on hand, laying a solid foundation for subsequent business development; the company paid out a total final dividend of about 191 million yuan (18 Hong Kong cents per share) to shareholders, with a dividend distribution ratio of more than 40 per cent.
Profit forecast, valuation and rating: the company's operating performance is eye-catching, the regional deep ploughing advantage is obvious, and the scale of expansion is steady. We have raised the company's 2021-2022 net profit to 637 million yuan (up 2.08%) and 918 million yuan (up to 1.10%). The profit introduced in 2023 is 1.268 billion yuan. The current share price corresponds to PE valuations of 12 times, 8 times and 6 times for 2021-2023, respectively, and dividend yields of 3.8%, 5.4% and 7.5%, respectively, based on the current dividend ratio. The current valuation and dividend yield are highly attractive in the industry, maintaining a "buy" rating.
Risk hints: Jianye Group's related parties rely on risk; user extension quality risk of life service platform; risk of rapid rise in labor costs under inflation expectations; risk of extension to the Central Plains region or less than expected risk.