\u3000\u3 China Vanke Co.Ltd(000002) 968 New Dazheng Property Group Co.Ltd(002968) )
Core view
The company released its annual report for 2021, achieving a revenue of 2.09 billion yuan, a year-on-year increase of 58.4%, a net profit attributable to the parent of 166 million yuan, a year-on-year increase of 26.6%, and a net profit of 150 million yuan after deduction, a year-on-year increase of 31.7%.
Taking multiple measures simultaneously, the revenue increased significantly, and the performance met expectations. In 2021, the company’s revenue increased significantly by 58.4%, and the net profit deducted from non parent company increased by 31.7%, which was in line with market expectations. The revenue growth was mainly due to the acceleration of market expansion. During the reporting period, the total bid winning amount of new expansion projects was 1.69 billion yuan, and the saturated annualized contract revenue was 820 million yuan, a year-on-year increase of 74.2%. At the same time, M & A projects and capital increase projects contributed 330 million yuan of revenue, which strongly supported the leapfrog growth. In addition, the revenue of extended services and value-added services increased by 28.9% year-on-year to 150 million yuan, continuously improving the service value.
Accelerate the nationwide layout and consolidate the leading position of public construction. During the reporting period, the revenue of regions outside Chongqing increased significantly by 144.7% year-on-year to 1.1 billion yuan, reaching 52.8% of the company’s total revenue. At the same time, the bid winning amount of new expansion projects accounted for 80%. By the end of 2021, the company had distributed 82 cities, with an area under management exceeding 100 million square meters, and achieved remarkable results in national distribution. In terms of business division, the revenue growth of aviation, schools and public properties reached 44.9%, 30.4% and 52.9% respectively. We continued to consolidate the dominant position of the industry, made breakthroughs in office relying on M & A, and the revenue increased by 134.3% year-on-year, and the revenue of commercial and residential properties also increased steadily by 11.0%. Differentiation advantages will escort the company’s long-term performance development.
During the period of high-speed expansion, the profit margin is under pressure, and there is still room for improvement in the future. The performance growth rate was lower than the revenue growth rate, mainly due to the increase of early-stage investment caused by the increase of foreign and new projects under the rapid expansion, resulting in a year-on-year decline in gross profit margin of 2.8pct to 18.7%, of which the gross profit margin of mature / new projects was 19.6% / 12.6% and that of Chongqing / non Chongqing projects was 20.7% / 16.8% respectively. In addition, the expiration of social security preferential policies and the amortization of equity incentive expenses also affect the company’s profits. If the impact of equity incentive expenses is excluded, the growth rate of net profit attributable to the parent company will reach 38.1%. We believe that even though the company is still in the expansion period, with the improvement of scale effect and management efficiency, the overall profitability of the company can remain relatively stable, and the performance is expected to achieve a shift in growth.
Profit forecast and investment suggestions
Maintain the buy rating and adjust the target price to 43.80 yuan (the original target price is 48.81 yuan). Considering the high expenditure in the expansion stage of the company and the low gross profit margin of the new expansion project, we adjusted the EPS forecast of the company from 2022 to 2024 to 1.56/2.14/2.84 yuan (the original EPS forecast of 20222023 was 1.63/2.43 yuan), and the valuation of the comparable company in 2022 was 22x. Considering the company’s performance growth and competitive advantage in the institutional property track, we maintain a 25% valuation premium, corresponding to 28x PE in 2022 and 43.80 yuan target price.
Risk tips
The epidemic situation affects the rhythm of completion and delivery. External market uncertainty. The uncertainty of welfare security policy.
