Steady growth in revenue and stable profitability
In the first half of 2022, Jinhe Commercial Management achieved an operating income of 521 million (YoY+27.04%); due to the impact of the epidemic, the company's construction project was delayed, and the project investment progress was slower than expected, and realized a net profit of 63 million (YoY-5.09%) in the first half of the year. The gross profit margin and net profit margin of the company are 39.3% (YoY-3.39pct) and 12.15% (YoY-4.12pct) respectively, of which the gross profit margin of leasing business is 40.91% (YoY-3.15pct), and the gross profit margin of property services and other businesses is 33.22% (YoY+7.25pct).
The company achieves operating cash flow of 244 million (YoY+161.16%). As the new leasing criteria affect the company's financial statements, earnings before discounted interest and tax can better measure the company's operating performance. In the first half of the year, the company's profit before interest and tax was 417 million (YoY+28.68%); after deducting the impact of the new lease criteria, the adjusted profit before interest and tax was 188 million (YoY+9.01%), and the actual profitability was stable.
The leasing income increases, and the proportion of Shanghai foreign revenue increases.
From a business point of view, the company leases operating projects with a total rental income of 393 million (YoY+31.08%), accounting for about 75.56% of revenue, and property services and other income totaling 127 million (YoY+15.99%). The growth of the company's rental revenue mainly benefited from the growing revenue from mergers and acquisitions and new development projects in 2021.
From a sub-regional point of view, the company continues to give full play to its regional advantages, with 62 projects in Shanghai, 7 projects in Beijing, 2 projects in Hangzhou and 1 project in Nanjing. In the first half of the year, the company achieved revenue of 425 million (YoY+19.59%) in Shanghai.
The income of the area outside Shanghai is 96 million (YoY+75.55%). As the overseas areas are less affected by the epidemic and Beijing M & A projects continue to contribute revenue in 2021, its revenue accounts for 18.4% of the total revenue, a large increase over the same period last year.
The scale of the project is expanded and the operation capacity is improved.
As of the first half of 2022, the company has a total of 72 projects under management, with an operating management area of 1.26 million yuan (YoY+21.15%).
Among them, the number of projects under the three modes of leasing operation, entrusted operation and shareholding operation is 44, 25 and 3 respectively, and the rentable area is 72, 42 and 120000 square feet respectively.
With years of accumulated brand advantages and investment advantages, the company's operating capacity continues to improve, and attracted a number of excellent new economy enterprises to settle in. In addition to traditional industries, the industries to which corporate tenants belong cover new economy formats such as culture, creativity, knowledge economy, and popular industries such as TMT and biomedicine, which can give full play to the effect of industrial agglomeration and enhance customer value.
Investment suggestion: the company starts early, chooses the location is excellent, the brand is popular, the industry first-mover advantage is obvious. At the same time, the company has a full value chain integrated management system and is a leading industrial park operator in China.
Taking into account the impact of the epidemic on the rental rate in 2022 and the possibility of rent reduction, we expect the company to achieve operating income of 1.1 billion, 1.36 billion and 1.7 billion from 2022 to 2024, up 21.0%, 23.5% and 25% from a year earlier.
The net profit attributed to the parent company was 140 million, 170 million and 210 million (previous values were 150 million, 180 million and 230 million), up 9.0%, 26.5% and 22.2% over the same period last year. EBITDA can better reflect its true profit level, we use EV/EBITDA to value the company, the current market capitalization is 6 times the 2022 valuation, maintaining a "buy" rating.
Risk hints: repeated risk of epidemic situation, risk of sharp decline in rental rate caused by macroeconomic downturn, risk of breach of contract by property owner or lessor, risk of customer surrender or less than expected investment, and risk of untimely updating of information or data used in research and report.