Start real estate development, comprehensive transformation of medical beauty ready to go. The company is a leading local housing enterprise that started and ploughed Nanjing. Now it has formally established medical beauty as the direction of strategic transformation and realized the vision of first-class development in Asia. At present, the company is still mainly real estate development business, in recent years, the scale of revenue and profits are relatively stable, and the overall profit margin has increased steadily. From 2016 to 2020, the company's operating income and return net profit CAGR were-15.1% and-0.8% respectively. 2020 revenue and return net profit reached 4.29 billion and 1.04 billion respectively, and gross profit margin and net profit margin reached 62.0% and 23.6% respectively.
To create the second growth curve, the medical and beauty industry is expected to take off. The domestic medical and beauty market has a broad space, but the penetration rate is much lower than that of developed countries. It is expected that the market size will still have double-digit growth in the next few years and will exceed 300 billion in 2024. As early as 2016-2017, the company acquired 5 medical hospitals through 5 billion-scale medical and beauty industry funds and listed companies, and established the "Suya Medical and Beauty" brand system, which has the first-mover advantages such as qualifications, brands and talents in the industry.
At present, Shanghai Tianda Hospital has the advantage resources to carry out "facial bone contour plastic technology" qualification, has the qualification for four-level surgery, which is the highest level in the industry, while the other four medical hospitals are still operating and incubating under the industrial fund. In addition, the 9.48% of the shares repurchased by the company in its early years are also expected to be used as incentives for the management and core backbone of the medical and beauty business, which will be of great help to attract talents in the industry. In the future, the company will continue to take M & An as the main way to build a closed-loop medical and beauty industry chain.
Real estate developers are well-off, supporting the overall transformation. The company has abundant land reserves. By the end of 2020, the company has a total land reserve of 271.2 million square meters, which is 28.5 times the sales area of the company in 2020, which is enough to meet the development and sales for many years in the future. As the land reserves obtained by the company are all before 2016 and are distributed in the Jiangbei area of Nanjing, thanks to the rise in housing prices in Jiangbei Pukou District in recent years, the forward-looking low-cost layout of the company will bring considerable benefits in the future and protect the capital needs of the transformation of medical beauty. In addition, the company is financially sound, with a low level of debt and financing costs, and it is more leisurely to repay debts in the future.
Cover for the first time to give a buy rating. We estimate that the EPS of the company from 2021 to 2023 is 0.40, 0.48, 0.59 respectively. The company's financial position is good, the real estate profitability is strong, and the strength to the medical and beauty business continues resolutely, so it gives the buy rating.
Risk hints: real estate regulation exceeded expectations; mergers and acquisitions in the medical and beauty industry fell short of expectations.
