Matters:
The company announced its semi-annual report for 2023. In the first half of the year, it achieved revenue of 2.68 billion yuan, an increase of 8.7% over the previous year, and net profit to parent of 290 million yuan, an increase of 30.1% over the previous year, which is basically in line with the performance forecast.
Ping An's point of view:
Profit growth was significantly superior to revenue due to reduced losses on US dollar bonds: 2023H1 achieved revenue of 2.68 billion yuan, an increase of 8.7% over the previous year, and net profit to the parent group of 290 million yuan, an increase of 30.1% over the previous year. Among them, property management service revenue was 1.69 billion yuan, up 21.7% year on year, community value-added service revenue was 7.1 billion yuan, up 13.4% year on year, smart park service revenue was 120 million yuan, down 31.2% year on year, and developers' value-added service revenue was 160 million yuan, down 42.1% year on year. The growth rate of net profit from the parent group was higher than revenue, mainly due to a decrease in the loss of fair value of listed US dollar bonds, which led to a year-on-year increase of 120 million yuan in other income.
The comprehensive gross margin for the period fell 2.2 percentage points year on year to 26.8%. Among them, the gross margin of property management services fell 3.8 percentage points year on year to 24.7%; the sales and management expenses ratio fell 0.1 percentage points year on year to 9.6% year on year.
The management scale continues to grow, and value-added services related to major logistics continue to advance: the final company of 2023H1 has a management area of 210 million square meters and a contract area of 320 million square meters, a net increase of 102 million square meters and 101 million square meters respectively over the end of 2022. Third parties accounted for 51.6% of the managed area and non-residential accounted for 24.7%; third parties accounted for 48.3% of the contract area, and non-residential accounted for 18.9%. Value-added services related to 2023H1 logistics continued to grow. Among them, group meal services received 220 million yuan in revenue, up 55.3% year on year, and successfully won bids for important group meal projects such as Shanghai Airport (Group) Co., Ltd., Tianjin Xiqing District Hospital of Traditional Chinese Medicine, and Changzhou Second People's Hospital; revenue related to facility management services was 130 million yuan, up 23.1% year on year, and the number of elevators managed exceeded 37,000.
Investment suggestions: Maintaining the original forecast, the company's EPS for 2023-2025 is expected to be 0.59 yuan, 0.64 yuan, and 0.69 yuan respectively. The current stock price corresponding to PE is 7.3 times, 6.8 times, and 6.3 times, respectively. The scale of the company continues to grow, its logistics strategy continues to deepen, and its ability to expand non-resident and third parties is enhanced. It is still expected to achieve steady development and maintain its “recommended” rating.
Risk warning: 1) The development of the big community+big late-stage model falls short of expected risks; 2) there is a risk that real estate transactions will continue to be weak, space in the property industry is limited, and company operations are under pressure; 3) there is a risk that market-based expansion is under excessive competition, the company's business development is under pressure, and profitability will continue to decline.