\u3000\u3 China Vanke Co.Ltd(000002) 968 New Dazheng Property Group Co.Ltd(002968) )
On March 28, the company released its annual report for 2021. The annual operating revenue was 2.088 billion, a year-on-year increase of + 58.40%, and the net profit attributable to the parent company was 166 million, a year-on-year increase of + 26.57%.
The revenue performance has increased significantly, and the profit margin of Xintuo project is in the climbing period: 1) deduct the high growth of non performance: the company achieved a revenue of 2.088 billion in 2021, a year-on-year increase of + 58.40%; The net profit attributable to the parent company was 166 million, a year-on-year increase of 26.57%, and the net profit attributable to the parent company after deducting non capital was 150 million, a year-on-year increase of 31.73%; 2) The proportion of high growth of Xintuo’s business income increased and pulled down the gross profit margin: the gross profit margin of the company decreased from 21.4% in the same period last year to 18.7% in 2021. Due to the relatively low gross profit margin of Xintuo projects and projects outside Chongqing, the number of projects under management increased from 369 in 2020 to 477 in 2021, and the proportion of projects outside Chongqing increased from 43.36% in 2020 to 49.90% in 2021, while the gross profit margin of corresponding mature projects (more than one year) of the company in 2021 was 19.6% The gross profit margin of new projects is 12.6%. In terms of sub regional gross profit margin, it is 20.7% in Chongqing and 16.8% in areas outside Chongqing. In the future, with the continuous accumulation of the number of projects of the company, the marginal impact of new projects on the gross profit margin will decrease. Coupled with the scale effect brought by the expansion of the company’s management scale, the gross profit margin is expected to remain stable in the future.
Rapid growth in scale, structural optimization and continuous implementation of benchmark projects: 1) the area under management exceeded 100 million M3: by the end of 2021, the number of project management of the company was 477, with a year-on-year increase of 29.3%, and the service area exceeded 100 million m2; 2) Further acceleration of Nationalization: in 2021, the total bid winning amount of the company’s expansion outside Chongqing increased by about 86% compared with the same period last year, accounting for 80% of the total bid winning amount of the company. From the perspective of income structure, by the end of the reporting period, the business contribution outside Chongqing accounted for 52.7% of the company’s income; 3) Rapid growth of core business: the company’s main public construction services have many subdivided fields. In 2021, the income of office property was + 134.3% year-on-year. During the year, the company won the bid for important landmark projects such as Bank of China financial center, China Reinsurance building, China Seismological Bureau and Luohu branch of Shenzhen Public Security Bureau; Aviation property revenue was + 44.9% year-on-year. During the year, it won the bid for six large and medium-sized international airports, including Shenzhen Bao’an International Airport, Wenzhou Longwan International Airport and Chengdu Tianfu International Airport. By the end of the year, there were 22 airport projects under management; Public property revenue increased by 52.94% year-on-year. During the year, it won new bids for major projects such as the winter sports management center of the State Administration of sports, the Canton Fair and UFIDA Industrial Park (Nanchang). The company continues to implement benchmarking public construction projects outside Chongqing, demonstrating its strong brand power, professional service power and good market power.
Implementation of equity incentive and continuous introduction of professionals: 1) during the reporting period, the company implemented the first grant of restricted stock incentive plan in 2021, set medium and long-term growth targets and fully motivate the core backbone; 2) The company attaches importance to the retention and introduction of talents. In 2021, the company introduced 34 middle and senior managers, including 5 leaders, to accumulate strength for the continuous expansion of scale in the future and release management efficiency.
Investment suggestion: the company’s outward expansion performance in 2021 exceeded expectations, accounting for more than half of the projects under its management in non Chongqing areas, and has won a number of benchmark projects outside the province. We believe that the company’s national market expansion ability has been further verified; In addition, during the reporting period, the equity incentive of the company was implemented and a number of core executives were introduced. With the national expansion, the foundation has been stable, and the area under management is expected to continue to break through in the future. Considering that the reduction of profit margin in this period is due to the factors of income structure and the cultivation period of new projects, and with the increase of income base, it is expected to be smooth in the future, we adjusted the EPS forecast of the company from 2022 to 2024 to 1.46, 2.05 and 2.63 yuan / share respectively (the previous value was 1.56 and 2.06 yuan / share respectively in 2022 and 2023), maintaining the “buy” rating of the company.
Risk warning: the expansion of the project is not as expected; The pressure of rising costs continues to increase.
