Revenue and profit increased steadily, and gross margin increased slightly. The company achieved total revenue of 1,109 million yuan in 2020, an increase of 24.40% over the previous year; achieved net profit of 99 million yuan, an increase of 52.01% over the same period of the previous year; and achieved diluted earnings of 1.32 yuan per share, an increase of 51.72% over the same period last year. In the reporting period, the company's gross margin was 20.76%, up 2.11 percentage points from the same period last year; net interest rate was 9.77%, up 2.18 percentage points over the same period last year. In terms of dividends, as of December 31, 2020, the company's total share capital is 100 million shares, and a cash dividend of 3.50 yuan (tax included) is distributed for every 10 shares. The total proposed cash dividend is 35.00 million yuan (tax included), accounting for 35.24% of Gui Mu's net profit. At the same time, the capital provident fund was used to transfer 3 shares to all shareholders for every 10 shares. After the transfer, the company's total share capital increased to 130 million shares.

The listing raised funds, and there is plenty of cash. In the reporting period, the company's three expenses accounted for 8.27% of revenue, a decrease of 0.11 percentage points over the same period last year. The company first publicly issued 250,000 shares on December 21, 2020, at an issue price of $18.78 per share. The total capital raised was 469.5 million yuan. After deducting underwriting fees and sponsorship fees, the capital raised was 443.4627 million yuan. The net cash flow from the company's operating activities was $103.63 million, mainly due to an increase in net profit. By the end of 2020, the company's monetary capital reached 717 million yuan. We believe the company has plenty of cash on hand, laying a solid foundation for the company's subsequent expansion projects to increase market share.

The scale of property management has been steadily expanding, and the range of high-quality customers has expanded. In 2020, 43 new projects were awarded in the property sector, adding 2.55 million square meters of management area, and the amount of new annual contracts signed reached 157 million yuan. Among them, the company won the bid for the Huawei national cloud data center operation and maintenance project and successfully entered the field of data center operation and maintenance; the Hangzhou branch won the bid for the Geely Automobile R&D headquarters project and entered the automotive manufacturing property service field for the first time; at the same time, it won the bid for the property project in the Alibaba headquarters building and the Alibaba Qinzangli project to further expand the Alibaba project; the Dongguan branch won the bid for the first phase of the Huawei University project, laying a good foundation for further expansion of the Huawei Dongguan market; the Beijing branch won the bid for the Alibaba China Zun project to develop a super-high-rise property service project; the Infoport branch won the bid for the Shenzhen International Exchange School project, which improved The company's market share of property projects in the education sector.

Investment advice: Maintain a “better than the market” rating. We believe that on the basis of comprehensive property management services, the company is actively expanding business, government affairs, asset management and value-added services, and that government services have become a new profit growth point for the company. We believe that the capital obtained through listing financing will help the company develop new projects, enhance the professional skills of employees, and optimize the management structure. We forecast the company's operating revenue for 2021 and 2022 to be 1,331 million yuan and 1,558 million yuan, net profit of the mother is 130 million yuan and 159 million yuan respectively, and the corresponding EPS is 130 million yuan and 1.59 yuan respectively. Based on the company's closing price of 41.20 yuan on April 29, 2021, the corresponding PE for 2021 and 2022 was 31.79 times and 25.91 times. We gave the company 35-40XPE in 2021, with a reasonable value range of 45.36 to 51.84 yuan, maintaining the “superior market” rating.

Risk warning: 1) The expansion of the company's new projects fell short of expectations. 2) Labor costs continue to rise. 3) Professionals are scarce.