Zhubo Design Co.Ltd(300564) (300564)
The leading private architectural design company has stable performance and no risk of medium and long-term development
The company started with residential design business, gradually expanded its public building design business, and gradually expanded its business from Shenzhen to the whole country. The gross profit margin of the company has been maintained at about 35% in recent five years, and the net profit margin has increased slightly in recent three years due to government subsidies and investment income. In 2020, the architectural design business of the company accounted for 92% and the main business accounted for a relatively high proportion. We believe that with the continuous improvement of urbanization rate and the acceleration of construction in Guangdong, Hong Kong and Macao where the company is located, the business is expected to maintain sustained growth. At the same time, the company has accumulated a lot of experience and excellent cases in the field of medical care and elderly care. With the deepening of population aging, the demand in the field of medical care and elderly care may gradually increase. The company holds more cash assets and its own real estate on the book, and also has a large investment value.
The level of urbanization has been raised to promote the good development of the construction industry
The development of construction industry is the direct source of market demand of architectural design industry. China’s urbanization rate will be 64% in 2020 and is expected to reach about 70% by 2030 (the average urbanization rate in developed countries is 80%). With the increase of urbanization rate and a huge population base, there is still much room for development of China’s urban construction in the future. According to the prediction of China business industry research, the total output value of China State Construction Engineering Corporation Limited(601668) industry will reach 34 trillion in 2024 and CAGR + 6.53% in 20-24, and the construction industry will maintain a good development trend.
Speed up regional construction + deep cultivation in the field of medical and health care, with strong performance guarantee
The company is headquartered in Shenzhen, the core city of Dawan District, Guangdong, Hong Kong and Macao, accounting for more than 50% of the revenue in South China. As one of the most economically developed regions in China, the scale of fixed asset investment and urbanization construction in South China are at the leading level. At present, the competition in the traditional architectural design fields such as residential buildings and office buildings is relatively sufficient. With strong professional design ability, the company actively expands professional subdivision fields, such as medical treatment, elderly care, rehabilitation and other special projects. He has rich project design experience in medical and elderly care architectural design, and has accumulated rich experience and good customer reputation.
Private architectural design leader, first coverage, given “overweight” rating
We believe that in the short term, the company may still take architectural design as its main business, with real estate design as the main component. In the medium and long term, the company will benefit from the acceleration of construction in subdivided fields such as medical care and health care. At the same time, the company’s asset quality is good. It is expected that the company will have eps1 in 21-23 years 41 / 1.56/1.71 yuan, 15 times PE in 2022, corresponding to a market value of 2.402 billion; As of 21q3, we believe that 538 million is the company’s discretionary cash (considering that the minimum monetary capital / operating revenue is about 45%, it is estimated that the capital required for operation in 2021 is 452 million); based on comprehensive calculation, the company’s reasonable market value is 2.940 billion (24.02 + 5.38), corresponding to the stock price of 28.57 yuan, which is covered for the first time, and is rated as “overweight”.
Risk tip: the prosperity of the real estate market is lower than expected; Designer brain drain and rising cost; Managing and operating risks of cross regional branches; There is a liquidity risk of decline or disposal of the value of the company’s self owned real estate.
