Core view
High income and profit growth, highlighting the anti cyclical characteristics. The total revenue of 50 listed property management companies in 2021 was 178.5 billion yuan, a year-on-year increase of 46.5%; The total net profit attributable to the parent company was 22.6 billion yuan, a year-on-year increase of 45.6%. Compared with other real estate downstream industries, the property industry is more anti cyclical, and the income of listed property management companies in 2021 is still growing. The growth rate of net profit was differentiated, of which 8 companies fell year-on-year, mainly due to the increase of impairment provision for related party accounts receivable or financial contract assets.
Among all businesses, community value-added services developed the fastest, and the proportion of income and profit continued to increase. According to our statistics, the total community value-added service revenue of the sample companies in 2021 reached 21.7 billion yuan, a year-on-year increase of 67%. In 2021, the overall community value-added service revenue of the sample companies accounted for 17.7% and the gross profit accounted for 27.5%, which increased by 1.5pct and 2.2pct respectively compared with 2020.
With the accelerated growth of pipe area, the proportion of third parties continued to increase. The total area under management of 30 listed companies in 2021 was 4.9 billion m3, with a year-on-year increase of 51%, which was faster than that in 2020, mainly because the head property management company bucked the trend and increased the scale of M & A. The average value of the third-party and non residential proportion of the 20 listed property management companies that published the area split data in 2021 was 61.0% and 32.5% respectively, an increase of 13.6pct and 1.5pct respectively compared with 2020.
The change trend of employee cost may be used as an independent reference index of financial power. We believe that by comparing the changes of employee costs of listed property companies, income of property companies and employee costs of affiliated real estate enterprises, it may be proved that the financial rights of some property companies are independent. In 2021, the staff costs of some affiliated real estate enterprises of private property management companies decreased or increased only slightly, while the income and staff costs of property companies maintained a significant increase, which reflects the financial independence of property companies, such as Jinke services.
The rapid growth of accounts receivable has become a common problem, which is expected to improve this year. The accounts receivable of 50 listed property management companies totaled 45.1 billion yuan in 2021, a year-on-year increase of 80%. Mainly because: 1) after the merger and acquisition, the year-end receivables of the target company are fully consolidated, while the income is only partially consolidated in months, and the receivables of the target company are relatively large. 2) The proportion of tog business increased. 3) As the real estate goes down, the business accounting period of Party A for real estate enterprises is lengthened. Most listed property management companies have attached great importance to the recovery of accounts receivable, and the business assessment indicators have changed from accrual basis to cash basis. It is expected that the collection of accounts receivable from small owners will be improved this year.
The robustness of related real estate enterprises dominates the valuation of the property sector, and the valuation of property enterprises with strong independent operation ability is expected to be repaired in the future. At present, listed material enterprises can be divided into three categories: 1) state-owned material enterprises; 2) Private property enterprises and related real estate enterprises are relatively stable; 3) Private property enterprises and related real estate enterprises are in a difficult situation. In the first half of 2021, the valuation trend of the three types of material enterprises was basically the same, and the obvious differentiation began in the second half of 2021. As of April 29, 2022, the average value of PE (TTM) of the above three types of companies is 32x, 18x and 6x respectively. We believe that the current situation of pricing the property sector completely according to the soundness of related real estate enterprises is not entirely reasonable. The reason for this pricing is that the market has not really recognized the independence of private property enterprises, or it has not been accurately identified from the statement end. We believe that in the long term, high-quality material enterprises with independent operation ability have high profit quality, high certainty of future growth, and the valuation is expected to be repaired.
Investment advice
Considering the robustness, the current state-owned enterprise property companies still have allocation value. We are optimistic about poly property with equity incentive and China Resources Vientiane life with a deep moat in the field of business management. In the long run, we recommend that the management scale be greatly improved. In terms of value-added services, the head property management company country garden service can quickly start after exploring a mature product line; As well as the property companies that have developed rapidly in value-added services, we recommend Jinke services and pay attention to Xuhui Yongsheng services.
Risk tips
The recovery rate of real estate sales is lower than expected; The development of value-added services is not smooth; Bad debts of accounts receivable exceeded expectations
