Event: the company issued a half-year performance announcement for 2021, with a year-on-year increase in net profit of 41.5%. On August 12, 2021, the company issued a half-year performance announcement for 2021. During the reporting period, the company achieved operating income of 1.564 billion yuan, an increase of 47.4% over the same period last year, a net profit of 260 million yuan, an increase of 41.5% over the same period last year, basic earnings per share of 0.21 yuan, and an interim dividend of 14.5 Hong Kong cents per share.
Comments: deep ploughing Zhongyuan has a sound operation, improved third-party expansion ability, and built a diversified life service ecosystem. 1) stable operation, solid development and clear strategy, future revenue and profit are expected to maintain high growth: 2021H1, the company's performance maintained rapid growth, achieving revenue of 1.564 billion yuan (year-on-year + 41.4%) and net profit of 260 million yuan (year-on-year + 41.5%) during the reporting period. The company's income structure continued to improve, with property management services accounting for 39.3% (year-on-year + 2.8pct.) and community value-added services to 22.9% (year-on-year + 3.9pct.) in the first half of the year. The proportion of related party transactions in companies has decreased significantly, with the proportion of related parties in trade receivables falling to 56.2% as of June 30, 2021 (71.6% at the end of 2020). The company's expense rate decreased during the reporting period, with a management expense rate of 9.3% (year-on-year-1.3pct.) and a sales expense rate of 1.7% (year-on-year-0.4pct.). The company will pay shareholders an interim dividend of about 152 million yuan (HK14.5 cents per share), with a dividend distribution ratio of about 59 per cent.
2) Deep ploughing the Greater Central Plains region, with a high degree of brand recognition, and the ability of third-party extension has been improved: as of the end of June 2021, the company's managed area was 115 million square meters, an increase of 63.9% over the same period last year; the contract area was 209 million square meters, an increase of 44.4% over the same period last year; the ratio of contract area to managed area is about 1.8 times, which can effectively guarantee the company's high revenue growth in the future. Among them, the company's third-party expansion grew strongly in the first half of the year, with the area under management from the third party reaching 55.35 million square meters, accounting for 48.2% of the total area under management (3.1pct.).
3) build a multi-life service ecosystem with the "Jianye +" platform as the core: as of 2021H1, the "Jianye +" platform has a total of about 4.7 million registered users, an increase of 67.9% over the same period last year. Thanks to the rapid growth of "Jianye +" registration, the revenue of the life services sector reached 206 million yuan (year-on-year + 19.2%) during the reporting period. With the gradual recovery of offline consumption scenes in the future, it is expected that the potential of intra-plate tourism services, Jianye canteen and other business is expected to be further released.
Profit forecast, valuation and rating: the company operates steadily and has obvious advantages in regional deep ploughing. The company's performance grew rapidly during the reporting period, but due to the local impact of recent rainstorms and floods in Henan on the company's operations this year, and the subsidy policy during the epidemic period may gradually withdraw in the next few years, we slightly reduced the company's 2021-2023 net profit to 612 million yuan (down 3.92%), 865 million yuan (down 5.77%) and 1.212 billion yuan (down 4.57%). The current share price corresponds to the 2021-2023 PE valuation of 10.5x, 7.4x, 5.3x. The current valuation is highly attractive in the industry, maintaining a "buy" rating.
Risk hint: the risk of rising human resources cost; the repeated risk of COVID-19 epidemic situation; the dependent risk of related parties of the parent company.