Recommendation logic: 1) relying on the parent company, China Olympic Park, enabling the coordinated development of a large customer base and diversified business to promote the creation of a healthy and beautiful platform; 2) the company accelerates the layout of the upstream and downstream of the medical and beauty industry. to create a "material provider, service provider and technology provider" for the beauty and health industry. 3) the strategic contraction of real estate sales business promotes the improvement of financial situation, and deep participation in the operation of Shanghai Oriental Meigu Science and Technology Park will help the company to obtain medical and beauty industry resources.
The group resources empower the development of the company, and the incentive plan promotes the high performance. In April 2020, China Olympic Garden acquired Jinghan shares, and in November the company changed its name to "Aoyuan Meigu". The group rescued the debt risk of the company and promoted the company's 2020Q3 to achieve a net profit of 215 million yuan, a 2020 net profit of 38.17 million yuan, and a successful turnaround. 2021Q1 achieved a net profit of 23.23 million yuan, and the company has successfully entered a new channel of development. China Aoyuan Group continues to empower the company to promote the acquisition of Liantianmei, the group's cross-border e-commerce platform, Olympic buyers, huge community and commercial customer resources, and Oriental Mei Valley project, enabling the company to build a healthy and beautiful industrial platform.
At the same time, the company launched the equity incentive plan. According to the exercise target, the company's net profit in 2021 and 2022 is not less than 390% and 1390% higher than that in 2020, and the corresponding target is not less than 187 million yuan and 569 million yuan.
Open up the upstream and downstream industrial chain and cast the ecological platform of medical beauty. During the period of explosive growth of China's medical and beauty industry, the penetration rate of Chinese medical and beauty projects in 2019 is 3.5%, which is still less than that of Japan, America and South Korea. The company adopts the strategy of "upstream foothold, mid-stream cut-in, downstream card position". Accelerated layout refers to the comprehensive platform of medical ecology: 1) Capital operation: on April 20, 2021, the company and Western Capital jointly set up 800 million M & A fund and 300 million beauty health industry equity investment fund to promote the layout of the upper and lower reaches of the medical and beauty industry chain. 2) Medical and aesthetic materials: in December 2020, the company invested 40,000 tons of bio-based green fiber in the first phase trial production, and the 60,000 ton second phase production line is expected to be put into production by the end of 2022. Lessel fiber is an ideal medical mask cloth material to help the company transform into a medical and aesthetic material manufacturer. 3) Medical services: on March 18, 2021, the company plans to invest 697 million yuan to acquire 55% of Zhejiang Liantianmei, a leading enterprise in East China (Liantianmei has revenue of 486 million yuan and net profit of 81 million yuan in 2020). It owns two 5A medical institutions (Huashan Liantianmei and Hangzhou Victoria Hospital). Lian Tianmei has four advantages, such as "high qualification + multi-patent", "professional team", "standardized management" and "deep customer resources", which bring about the success of the company's "big store model", and its profitability far exceeds that of its peers. promote the company to enter the mid-stream medical and beauty service field. 4) Medical Beauty Technology: in 2021, the company frequently cooperated with Jiyuan Biology, Jiyuan Pharmaceutical and South Korea KDM to promote the medical beauty technology business, hoping to cut into the main race track of medical beauty products through product agents.
The contraction of real estate development promotes financial improvement and is deeply involved in the operation of Oriental Meigu. The revenue of real estate development declined in 2019, but still accounted for 70% of the company's revenue, and the gross profit margin of 33.7% remained at a high level in the industry. The contraction in real estate development contributed to the improvement of the financial situation, and the proportion of short-term debt decreased from 70% to 20% in 2020-2020. The cash-to-debt ratio increased from 0.4 to 0.9, and the company expense rate decreased significantly in the same period. The company is deeply involved in the operation of Oriental Meigu. Shanghai Meigu is a benchmark project for the integration of the production city of the group. the company provides medical consulting services for the project, with a total service fee of 1800 million yuan per year, and cooperates to promote the coordinated operation of the three major listed companies in the Olympic Garden system. it will help the company to combine the resources of the medical and aesthetic industry and enrich the format of the medical and aesthetic industry.
Profit forecast and investment advice. We estimate that the company's EPS in 2021-2023 will be 0.17 EPS 0.52 prime 1.03. Considering the layout of the upstream and downstream business space, the group empowerment effect and the implementation of the equity incentive plan, the future performance is expected to maintain a high growth rate, giving the company's 2022 performance 68 times valuation, the first coverage, and a "buy" rating, with a target price of 35.64 yuan.
Risk tips: real estate sales are not as expected, medical and beauty business layout is not as expected, green fiber production is not as expected, the progress of the acquisition is not as expected, the performance of the acquisition target is not as promised, and so on.