Key investment points
Review: pressure on the sector caused by policy and real estate concerns. From the beginning of 2021 to the middle of 2021, the property management sector performed well driven by policy support and good performance. However, since then, the eight ministries and commissions have regulated the real estate order, causing concerns about stricter supervision, superimposing the impact of real estate difficulties, and the overall decline of the sector. As of December 17, 2021, the property management sector fell by 25.5% in the whole year, underperforming the Hang Seng Index by 10.7pct; PE (TTM) fell to 18.7 times, at the 0.1% quantile since 2016; structurally, the valuation of large property enterprises is relatively high.
The policy encourages the wind direction to remain unchanged and develop independently to hedge real estate risks. The policy continues to be standardized and market-oriented, continues to encourage the construction of life services and smart properties, and the intention to promote the medium and long-term healthy development of the industry remains unchanged. For the downside risk of real estate, the improvement of property management independence is expected to form a hedge. On the one hand, the improvement of market expansion capacity weakens the delivery contribution of related real estate enterprises, on the other hand, the rich source of income further reduces the impact of development business. Under extreme assumptions, a 15% decline in commercial housing sales will lead to a 5.3% decline in the expected revenue of property management, and the expected revenue growth rate will drop from 30% to 23.2%. The absolute growth rate will remain at a high level, and the impact is generally controllable.
Fundamentals continue to be optimized, and growth can still be expected. Returning to the origin of property management, the industry stock attribute is prominent, and the available management scale will continue to grow driven by incremental delivery and stock penetration. New growth poles such as community value-added and urban services are becoming more and more mature, and high-quality segments such as business management are emerging, which are expected to add vitality to the development of the industry. In terms of pattern, M & A integration and differences in comprehensive strength contribute to the continuous improvement of concentration, high-quality material enterprises are expected to benefit from it, and growth is still worth looking forward to.
Investment suggestion: looking forward to 2022, the wind direction encouraged by the property management policy remains unchanged, the real estate benefit policy warms, the capital eases and the bottom stabilizes, and the suppression of property management valuation is expected to gradually ease. From the perspective of fundamentals, the management scale of the industry has been steadily improved, new growth poles are becoming more and more mature, high-quality segments have emerged, and the share expansion and rapid growth of excellent material enterprises under the trend of increasing concentration are still worth looking forward to. At present, the valuation of the sector has fallen to an all-time low, and the cost performance continues to highlight. It is recommended to take a positive view of the performance of property management throughout the year, choose the opportunity layout, patiently hold shares and wait for returns. As the industry differentiation intensifies, the selection of subscripts will be more focused. It is suggested to pay attention to the property management leaders with outstanding comprehensive strength, such as country garden service, poly property, Jinke service, xinchengyue service, rongchuang service, etc. At the same time, it is suggested to pay attention to commercial operators who occupy high-quality business management track and light asset output strength, such as Xingsheng commerce.
Risk tips: 1) performance guidance and risk adjustment; 2) Risk of loss of independence; 3) Business progress is less than expected risk.
