Highly recommended. The target price remains at HK $4.93 per share. Color Life recently released its 2019 results, which is basically in line with our expectations. At the performance meeting, the management sincerely combed and adjusted the past strategy, and planned to adopt a prudent strategy to return the focus of work to property management operation, while reviewing all kinds of innovative business. Based on this conservative forecast for the company, it is estimated that the EPS in 2020-21 will be HK $0.41 per share and HK $0.42 per share, respectively. Based on this, Cai Life's current valuation is only 7.8 times the 2020 PE and 2021 PE, which is lower than the industry average level of 25 times the 2020 PE. For a property management company with a tube area of 360 million square meters, we think its value is seriously undervalued.
The performance in 2019 is in line with expectations. The income of Caixian reached 3.845 billion yuan in 2019, an increase of 6.4% over the same period last year, which was higher than the corresponding forecast of 1.9% when we first covered it. The company's full-year net profit was 498 million yuan, an increase of 2.8% over the same period last year, which was lower than our forecast of 1.9%. The company announced a dividend of 9.12 cents per share, equivalent to a dividend ratio of 26.0%.
The net debt level is lower than expected. Mainly because the company's debt repayment was stronger than we expected, the company's net debt at the end of 2019 was 570 million yuan, which was lower than we expected by 26.1% and decreased by 41.0% compared with 2018. The corresponding net debt-to-equity ratio is 14.1%, which is 7.4 percentage points lower than our forecast and 15.6 percentage points lower than in 2018. The company's net financial expenses decreased by 30.7% in 2019 compared with the same period last year.
Growth in management and contract area has slowed down. In 2019, the contract area of the company was 562m square meters, an increase of only 837.7 square meters compared with the same period last year; the area under management was 360 million square meters, a decrease of 348.8 million square meters over the same period last year. This is mainly due to the change in color life strategy, combing and reviewing existing projects, and slowing down the expansion of new projects.
The forecast for 2020 remains basically unchanged. Based on the company's conservative strategy, we expect Lai Life's net profit in 2020 to grow by only 3.9% year-on-year to 518 million yuan, down 5.4% from our previous forecast. We conservatively assume that net profit in 2021 will basically maintain the 2020 level.
Risk hint: a large-scale drop occurred in the business review. There is a problem with debt repayment.