Review of performance and operation of the sector and the company: 1) large industry space: we expect the industry market space to reach 3 trillion by 2025; 2) The revenue performance increased significantly and the profit margin increased steadily: 50 property enterprises with a + H shares realized a total net profit attributable to the parent company of 13.941 billion in the first half of 2021, a year-on-year increase of + 80.60%; The gross profit margin increased from 22.65% in 2017 to 28.91% in H1 2021, and the net profit margin increased from 12.17% in 2017 to 15.56% in H1 2021; 3) Differentiation among companies: in general, companies that rely on real estate developers, account for a high proportion of residential formats, and have strong delivery volume and M & a logic have a rapid growth in overall revenue and profit scale; 4) Future performance will be supported: the area under management and contract will maintain rapid growth, and it is expected to exceed 40% in the whole year.
Capital market performance in 2021: 1) strong performance at the industry level in the first half of the year and continuous adjustment in the second half of the year: related party risks and concerns about industry policies dominated the market of the sector, and the valuation reached the bottom; 2) Reshaping the internal valuation system of the sector: the anti risk ability has become the main driving factor of the company’s valuation differentiation, and the stability of the company’s operation has replaced growth, which has become the decisive factor of valuation in this period of time.
Judgment on the future trend of the industry: 1) Prosperity: maintained at a high level, and the industry space is still broad; 2) Policy: formulated along the direction of marketization and standardization, which is expected to benefit the development of the industry in the long term; 3) Pattern: the leading advantage is stable, and Matthew effect is emerging; 4) Operation: more independent operation, extension of business scope, specialization in subdivided fields, scientific and technological construction of moat.
Investment strategy: in 2021, the fundamentals of the property industry and the company will be stable and good, and the logic of high-quality track in the industry and high growth of the company will remain unchanged. The performance of the capital market is poor, which is mainly dragged down by the credit risk of real estate related parties. From the development trend of the industry, we believe that the industry pattern has been relatively clear: the strong is always strong; At the same time, there are also front-line companies that rank among the leaders with the help of the capital market and their own excellent operation. In terms of investment direction, we recommend industry leaders and high-quality first-line companies, or head companies with strong competitiveness on subdivided tracks.
In the short term, considering that the real estate industry is declining or exceeding expectations, the credit risk of real estate enterprises may spread to property companies for a period of time and suppress the valuation of some companies. Therefore, the relative income of short-term high credit real estate enterprises may be more significant. It is suggested to pay attention to the head companies backed by state-owned enterprises and central enterprises, such as poly property, China Merchants Property Operation & Service Co.Ltd(001914) , CNOOC property, green city services, etc; In the medium and long term, when the real estate credit risk is over, it is recommended to pay attention to the growth industry leaders and high-quality front lines, such as country garden service, rongchuang service, Xuhui Yongsheng service, Jinke service, xinchengyue service, Shimao service, Jianye new life, hejingyouhuo, etc; In addition, there is a logic of increasing both volume and price for subdivided tracks such as business management and business writing in the next 3-5 years. It is suggested to pay attention to high-quality track leaders and first-line brands, such as China Resources Vientiane life, Baolong commerce, New Dazheng Property Group Co.Ltd(002968) , Xingsheng commerce, excellent commercial enterprises, etc.
Risk tips: 1. The completion of the real estate industry is lower than expected; 2. The real estate market sales are lower than expected; 3. The marketization progress of property fees is lower than expected; 4. The penetration rate of property management business was lower than expected; 5. The degree of liberalization of some commercial property markets is lower than expected; 6. Risk of data measurement deviation.
