Overview of events

According to the annual report released by Electronic City, the company achieved revenue of 3.77 billion yuan in 2020, + 106.6% of the same period last year, and net profit of 520 million yuan, + 48.4% of the same period last year.

Rapid growth in performance and results of transformation

In 2020, the company achieved operating income of 3.77 billion yuan, an increase of 106.6% over the same period last year, and a net profit of 520 million yuan, an increase of 48.4% over the same period last year. The company innovates the service mode of science and technology incubation, at the same time, strengthens the brand output, and the professional service ability continues to improve. During the reporting period, the company's return on net assets, gross margin of sales and net profit margin of sales were 7.46%, 44.29% and 14.47% respectively, compared with the previous year + 2.16pct,-4.94pct and-4.06pct, and the profit performance declined, mainly due to the disturbance of COVID-19 epidemic.

Abundant soil storage and reasonable layout

In 2020, the company realized sales of 4.8 billion yuan, + 113.3% year-on-year, and sales area of 527000 square meters, + 48.3% year-on-year. By the end of 2020, the company has an area of 1.063 million square meters to be developed, a new construction area of 56000 square meters, and an area of 1.379 million square meters under construction, which is 4.7 times that of the current year. At the same time, as the leading company of science and technology industry real estate, the project layout is in the first-and second-tier cities with strong scientific and educational capacity and good economic condition, and the land reserve is of high quality.

The financial situation is good, and the advantage of low-cost financing is obvious.

At the end of the reporting period, after excluding accounts received in advance, the company's asset-liability ratio and net debt ratio were 58.46% and 39.49%, respectively, and the leverage ratio was low in the industry. The overall financing cost in 2020 is 4.57%. Thanks to a good financial position and high-quality asset reserves, the company's financing cost is at a low level in the industry.

Investment suggestion

Electronic City performance rapid growth, adhere to the science and technology service strategy to lead the company's development model innovation, good financial situation. Affected by the epidemic, we downgrade the company's profit forecast. It is estimated that the company's revenue for 21-23 years will be 100 million yuan in 23-25-27 (the previous forecast in 2021) is 2.6 billion yuan), and the EPS will be 0.44 billion in 2022 (0.46 in 2022), corresponding to PE 10.9 in 10.3 in 9.2 times, maintaining the company's "overweight" rating.

Risk hint

The transformation is less than expected, the scale of sales is declining, and the provision for impairment of inventory affects performance.