2021 performance is in line with our expectations
China International Trade announced its results for 2021: revenue 3.59 billion yuan, an increase of 16% over the same period last year, and a net profit of 1.02 billion yuan, an increase of 24% over the same period last year, with a profit per share of 1.02 yuan, in line with the performance of KuaiBao and in line with expectations.
The income of apartments and hotels has obviously rebounded, and the profit margin has been repaired. In 2021, the company's hotel revenue increased by 40% to 470 million yuan compared with the same period last year, which is more obvious than in 2020, rising to about 70% before the epidemic (670 million yuan in 2019), while apartment income reached 90 million yuan, a sharp increase from 2020 (7 million yuan). Thanks to higher rents and rental rates, the company's mall revenue rose 23 per cent year-on-year to 1.18 billion yuan, while office revenue fell 1 per cent to 1.5 billion yuan. The company's full-year pre-tax gross profit margin was 55.7%, which was higher than the same period last year (mainly due to the slowdown in depreciation, amortization and maintenance expenses). The four expense rates decreased by 0.8ppt to 8.3%, with a net profit margin of 28.5%, an increase in 1.9ppt compared with the same period last year.
The rental rate of the mall reached a new high, and office rents fell slightly. Due to the high rent, renewal rent and commission rent, the rental base affected by the epidemic in 2020 was low. The average rent of the company's mall in 2021 increased by 19% year on year to 1175 yuan / square meter / month, and the rental rate increased by 3.0ppt to 98.8%, a record high, with the East Building making the most significant contribution, increasing 8.3ppt to 99.9% compared with the same period last year. 2021 average office rents fell 3 per cent year-on-year to 619 yuan per square meter per month, with Phase B falling the most (down 6 per cent year-on-year); occupancy rates rose 2.4ppt to 94.5 per cent year-on-year.
Trend of development
Apartment income is expected to continue to grow in the future. After renovation, the ITC apartment was put into operation again in September 2020. By the end of 2021, the average occupancy rate had rebounded to 39.4%, and the average rent was 391 yuan per square meter per month, which was significantly higher than that before the renovation (240-250 yuan per square meter per month). We believe that due to the impact of the epidemic in the short term, the rental of high-end serviced apartments is still under certain pressure, which may lead to a slight slowdown in occupancy rates and rental growth, but rent growth can still be expected in the future without changing the trend of medium-and long-term rental demand recovery.
The proportion of dividends for the whole year has increased to nearly 60%, paying attention to the increase in the proportion of dividends in the follow-up. The company paid a dividend of 0.60 yuan per share in 2021, with a dividend ratio of 59% (39% in 2019 and 49% in 2020) and a corresponding dividend yield of 3.64%. Prior to this, due to the continuous renewal and transformation of investment property, the company's capital expenditure was higher. We expect that with the reduction in capital expenditure, the company's dividend ratio is expected to remain high, and investors are advised to pay attention to the increase in the company's subsequent dividend ratio.
Profit forecast and valuation
Considering that the rents of shopping malls and hotels have recovered better than expected, we have raised the profit by 3.3% to 1.12 billion yuan in 2022 and introduced a profit forecast of 1.19 billion yuan in 2023, corresponding to a year-on-year growth rate of 9.5% and 6.0%. Maintain a neutral rating, but taking into account the market's increased risk appetite for high-end holding properties, we raise the target price by 17% to 17.26 yuan, corresponding to 15.5% 14.6 times 2022-23 target price-to-earnings ratio and 6.5% upside space. The company is currently trading at 14.6 picks 13.7 times 2022-23 earnings.
Risk
The rent or rental rate of holding property is not as fast as expected; the scope and extent of COVID-19 's epidemic are higher than expected.