The performance in 2020 fell short of market expectations
Affected by the epidemic, the net profit of Yiju fell 65% year-on-year to 304 million yuan (the net interest rate fell 5.7% to 3.8%), and the core net profit fell 64% to 357 million yuan (6.6% to 4.4%). Lower than market expectations. The dividend distribution rate for the whole year is basically unchanged at 25%, and the corresponding dividend yield is 0.7%.
The epidemic suppressed performance in 2020, but operating and profit performance basically recovered in the second half of the year. Affected by the epidemic, about 1600 sales offices across the country were forced to shut down in the first quarter of 2020, resulting in a 55 per cent drop in profit before interest, tax, depreciation and amortisation in the first half of the year compared with the same period last year, while in the second half of the year, with the normalization of operations, the indicator recorded a year-on-year growth of 35 per cent (an increase of 117 per cent compared with the previous year) and achieved a positive operating cash flow surplus for the whole year.
First-hand housing agency business pays more attention to quality, and the scale is generally stable. In 2020, the total sales area of the first-hand housing agency business was 3290 million square meters, with a sales amount of 405.6 billion yuan, a year-on-year decrease of 24 percent. The unsold reserve area signed by the end of the year was 217 million square meters. Looking forward, we think the company will pay more attention to contract quality (such as profit margin, payback speed, etc.), so it is expected that the scale of first-hand housing agency business will be generally stable.
Fangyou plate will achieve four major aspects of empowerment in 2020, and the scale is expected to grow actively in 2021.
With the blessing of BABA, the majority shareholder, E-residence will empower the tenants in four aspects: housing / customer source, mechanism, finance and technology in 2020. Although the volume of plate transactions fell by 22% year-on-year in 2020 and revenue fell by 23% year-on-year, we believe that with the removal of epidemic suppression in 2021, the volume of plate transactions is expected to grow by about 50%.
Kerry has upgraded in three major areas, and the scale of its business is expected to grow steadily. Kerry upgraded its coverage, business model and data resources in 2020, and launched new products such as CAIC managed cloud and CAIC managed cloud, with revenue slightly increased by 1% to 990 million yuan compared with the same period last year.
We believe that the initial transformation of the business will inevitably increase the cost investment, profitability is under temporary pressure, and its financial performance is expected to improve gradually.
And watch Leju perfect online and offline marketing closed loop. Yi Ju completed the merger of Leju Holdings Ltd Holdings Co., Ltd. in November 2020, and helped it to realize the strengthening and upgrading of "new media, new advertising and new transactions" during the year. Leju Holdings Ltd contributed 1.13 billion yuan in income during the reporting period.
Trend of development
The company plans to focus on "focusing on the real estate industry and promoting digital upgrading" in 2021. The company plans to continue to build a digital marketing and service platform, two-wheel drive to help all participants in the industry to achieve digital upgrading. In terms of financial performance, we expect profit margins and profitability to continue to bottom out in 2021, but there may be more positive growth on the revenue side.
Profit forecast and valuation
We cut our 2021 profit forecast by 70% to 372 million yuan (an increase of 22% over the same period last year), mainly based on adjustments to the volume of sales and operating profit margins. Introduce a profit forecast of 488 million yuan in 2022 (31% year-on-year increase). Cut the target price by 43% to HK $8.28 (28 times 2021 price-to-earnings ratio, 11% upside) to maintain an outperforming industry rating. The company is currently trading at 25 times 2021 earnings.
Risk.
The input-output ratio of the new business is lower than expected.