Main points of investment

Items:

According to the company's annual report for 2020 and quarterly report for 2021, the operating income in 2020 was 9.57 billion yuan, down 14.6% from the same period last year, and the net profit returned to the mother was 312 million yuan, down 62.3% from the same period last year, corresponding to 0.13 yuan in EPS, which was basically consistent with the previous performance of KuaiBao, and proposed to pay a cash dividend of 0.13 yuan (including tax) for every 10 shares. In the first quarter of 2021, the operating income was 2.93 billion yuan, an increase of 129.8 percent over the same period last year, and the net profit returned to the mother was 172 million yuan, an increase of 205.3 percent over the same period last year, corresponding to 0.07 yuan of EPS.

The company released a semi-annual performance forecast for 2021. It is estimated that the net profit of returning home in the first half of 2021 is 3.4-380 million yuan, an increase of 741.3%-840.3% over the same period last year, corresponding to 0.15-0.16 yuan of EPS.

Safety point of view:

Many factors affect the performance of 2020, and the performance of 2021Q1 increases greatly under the low base: the company's revenue in 2020 decreased by 14.6% compared with the same period last year, and the net profit of home ownership decreased by 62.3%. This is mainly due to: 1) the epidemic affected the business activities in the first quarter of 2020, resulting in the net profit of 2020Q1 being-160 million yuan, a decrease of 370 million yuan compared with the same period last year; 2) the income from closed decoration of self-owned shopping centers in New Zealand 2) the company increased investment in digital construction, and IT fees increased by more than 50% in 2020 compared with the same period last year. (3) the asset impairment loss during the period was 12.85 million yuan, an increase of 13.48 million yuan over the same period last year. After the epidemic, the operation recovered and superimposed the influence of low base, and the company's 2021Q1 realized a net profit of 172 million yuan, an increase of 205.3% over the same period last year.

Business expansion is accelerated, and the goal clearly demonstrates confidence in development: the company will achieve a total transaction value of (GTV) of about 400 billion yuan in 2020. The direct business will strengthen the development of advantageous regions such as North and East China, pilot the partner model, and implement the strategy of increasing market share, of which Hangzhou has a secondary market share of more than 38% in March. Vigorously promote the brand to join, 2021Q1 finally joined more than 1300 stores, driving the total store growth to nearly 4000. In terms of new housing business, we will continue to increase the breadth and depth of cooperation. The unit price of new housing channel customers in 2020 is 53600 yuan, up 2.6% from the same period last year. 2200 items can be sold per month, an increase of 9.4% over the same period last year. In 2020, the business will be expanded to Shenzhen and the layout of Guangdong-Hong Kong-Macau Greater Bay Area will be strengthened. 236000 apartments will be in charge at the end of 2020, with an annual rental rate of 94.4%. At the end of 2021Q1, 239000 apartments will be managed, with an average out-of-house rate of 10.3 days and a rental rate of 96.2%, maintaining a leading edge in the industry. The company has set a goal of increasing the number of stores to 2100 in 2021. In the next three years, with the promotion of digital strategy and platform transformation, the company will strive to build a digital residential service platform for billions of GTVs.

Digitization continues to advance, and employee stock ownership promotes win-win results: the company adheres to the established digital construction investment plan, and the IT team accounts for more than 80% of the holding headquarters by the end of 2020. During the period to achieve iterative upgrading of the official website and core business system, and develop access to the platform product "I + product group" for brokers, brokerage stores and brokerage brands. At present, the "I + product group" has connected more than 75000 external brokers, of which the number of paying users has increased to 5000. At the same time, the activity of the official website continues to improve, accounting for 24.6% of the transaction commission in 2020. In July 2020, the first phase of the employee stock ownership plan to complete the secondary market stock purchase, involving grass-roots business backbones and managers and other 368 people, the implementation of the employee stock ownership plan can effectively promote the combination of the interests of employees and the company to achieve a win-win situation.

Investment suggestion: consider the clear goal of the company's expansion, short-term offline store expansion, digital construction and other investment will continue to increase, downgrade the company's 2021-2022 EPS forecast to 0.26 yuan (original 0.36 yuan), 0.30 yuan (original 0.41 yuan), the current stock price corresponding to PE is 14.4 times, 12.4 times. As a leading company in the real estate brokerage and housing leasing industry, the company has obvious overall business synergy, and the regional deep ploughing operation barriers are prominent, which is expected to fully benefit from the stock housing era; at the same time, the growth goal of offline stores is clear, online and offline integration, platform building to open new momentum of growth, and maintain the "recommended" rating.

Risk tips: 1) changes in the market competition environment and industry prosperity may lead to lower-than-expected store expansion. at the same time, the building of new stores may face problems such as lack of coordination between the first and second lines of work, low efficiency of system support, etc.; 2) if the subsequent demand resilience leads to the scale of real estate transactions is not as expected, the growth of the company will be affected; 3) the housing cycle will be lengthened and the rental rate will decline.