Company news

The company's recent situation

We recently participated in a reverse roadshow held by Greentown Services in Ningbo to investigate some of the company's typical projects in Ningbo. The updates are as follows:

reviews

Relying on the brand and benchmarking effect, we are deeply involved in the Ningbo market. Greentown Services has been in the Ningbo market for nearly 20 years, opening up the Ningbo market through benchmark residential projects, and has established a comprehensive competitive advantage in various business formats such as corporate headquarters, commerce, and transportation. It has signed contracts with many well-known projects including Pacific Bird headquarters, Hankyu Department Store, and Ningbo Lishe Airport. In recent years, the company has maintained a good pace of expansion in the Ningbo market, relying on strategies such as major customers, special classes on core business formats, and joint ventures. Up to now, Greentown Services has more than 200 projects under management in the Ningbo market, with a management area of about 29 million square meters, leading the market share.

Regional density empowers quality and efficiency, and intensive management has begun to form a system. Since 2022, Greentown Services has promoted operational efficiency from the top down. Relying on its own management project density, the Ningbo Company has achieved good results in improving human efficiency. At the top to bottom level: 1) Reuse and streamline central and back-office functional department personnel; 2) Streamline multiple projects into integrated operating areas in areas with high project density and within a radius of 3 km, and reuse personnel for project managers, engineering supervisors and other employees within the area; 3) Unified outsourcing management to reduce the original cost of outsourcing through centralized procurement, while reducing the original cost of outsourcing for security and security Cleaning and other services Implement standardized management; 4) Some projects replace manual jobs through the application of technological equipment. Take a project as an example. After systematic intensive management, the project staff allocation dropped from about 200 to 160 people. After optimization, there was a significant improvement in human efficiency in all aspects of security, cleaning, and engineering. After optimization, per capita revenue increased by 8%, per capita service area increased by 7%, and the ratio of labor costs to the total cost decreased by 3 percentage points. In the process of continuous efficiency improvement, the company maintained good service quality, and project satisfaction and acceptance rates continued to be at a good level. Looking forward to the future, there is still some room for improvement in project-level optimization. We have mentioned many times before that since 2022, the operational and financial improvements of Greentown Services have begun to bear fruit under the continuous promotion of quality and efficiency measures. We believe that the management improvements of the Ningbo Company have also confirmed the previous judgment.

Profit forecasting and valuation

We maintain our profit forecast for the full year, and expect net profit to mother to increase 25% and 20% in 2024 and 2025 to 0.76 billion yuan and 9.1 billion yuan, respectively. We believe that the company is on the right track in terms of efficiency optimization and strategic focus. We are optimistic about the company's mid-term operating performance, and maintain the industry rating and HK$5.56 target price (corresponding to 21 times the 2024 target price-earnings ratio and 37% upward space). The company is currently trading 15 times the 2024 price-earnings ratio.

risks

Progress in improving quality and efficiency falls short of expected risks, impairment improvements in some asset classes fall short of expected risks, and competition from third parties increases risks, etc.