\u3000\u3000 Shenzhen Ridge Engineering Consulting Co.Ltd(300977) (300977)
The growth of revenue performance is resilient and is expected to continue the rapid growth trend. The company released the performance forecast for 2021, and achieved a revenue of 740-830 million yuan in the whole year, with an increase of 30% – 45% (median 38%). It is commendable that the company still achieved rapid income growth under the downward pressure of the real estate industry and repeated epidemics in various regions in 2021; In the whole year, the net profit attributable to the parent company was 130-160 million yuan, with an increase of 10% – 35% (median 23%). If the equity incentive fee of 15.68 million yuan is restored, the net profit attributable to the parent company will be 150-180 million yuan, with an increase of 23% – 48% (median 36%), which basically matches the income growth rate. Among them, Q4 achieved revenue of RMB 200-290 million in a single quarter, with a same increase of 2% – 45% (median 24%), and the median growth rate was basically the same as Q3; Q4 achieved a net profit attributable to the parent company of RMB 40-70 million in a single quarter, with a year-on-year change of – 26% to + 33% (median 3%). The slowdown in Q4 performance is expected to be mainly due to factors such as more provision of Q4 equity incentive fees, a large increase in ticket prices, the cancellation of social security relief for the epidemic, and the increase of the company’s marketing promotion. The company’s initial equity incentive plan stipulates that from 2021 to 2023, the revenue growth will reach 35% / 35% / 35% respectively, or the performance growth will reach 35% / 30% / 30% respectively. From this performance forecast, the target in 2021 is likely to be successfully completed. It is expected that with the continuous improvement of the penetration rate of the third-party evaluation industry, the results of the company’s early new market and new product layout will continue to appear, The follow-up is expected to continue the rapid expansion trend.
Determined to forge ahead, there are many business highlights in 2021: 1) increase in government customers: the company has served more than 80 unit customers in the field of public construction, continued to develop government projects such as infrastructure and affordable housing, and dispersed business risks; 2) Optimization of real estate customer structure: focus on developing real estate developers of central enterprises and state-owned enterprises such as China Resources, poly, China shipping and China Merchants to optimize the real estate customer structure; 3) Develop new products: the company accelerates the development and promotion of new products, including on-site management of fine decoration of real estate, stock housing market evaluation, fire protection evaluation, project quality potential defect insurance (IDI), green and low-carbon building evaluation, and continues to cultivate new growth points; 4) Accelerating regional expansion: last year, regional operation centers were successively set up in Wuhan, Shanghai, Beijing and other places. Through localization deployment, it is expected to change the company’s sales model from sitting sales to a more active marketing model, speed up the national market development, reduce travel costs and improve profitability; 5) Digital transformation: by establishing a data center and making full use of the advantages of data resources, it can not only improve the quality and efficiency of internal management, but also form an enabling industry of data products and realize the realization of the company’s digital assets.
The demand for third-party project evaluation is expected to accelerate, and the share of leading cities tends to increase. In the long run, with the “competitive quality” gradually becoming the new focus of local auction of real estate enterprises, it is expected to change the current situation of “emphasizing turnover and neglecting quality” of real estate enterprises. Real estate enterprises are expected to pay more attention to building the product power of the house itself and promote the continuous release of the demand for third-party project evaluation to improve the quality of house construction and delivery. In the short term, the current real estate industry has gradually entered a reshuffle period, and the merger and integration events tend to increase. The project receiver often puts forward more demands for the visibility and controllability of the project quality, promoting the acceleration of the demand for third-party project evaluation. In addition, from the perspective of competition pattern, the current real estate chain continues to shuffle. Small and medium-sized third-party engineering evaluation enterprises have weak anti risk ability and high operating pressure, and are expected to gradually withdraw from the market, while the leading market share of third-party evaluation with high-quality core customer resource endorsement and outstanding comprehensive business strength is expected to increase.
Investment suggestion: we predict that the net profit attributable to the parent company from 2021 to 2023 will be RMB 150 / 2.0 / 260 million respectively, with a year-on-year increase of 23% / 33% / 32%, EPS will be RMB 2.21/2.94/3.89 respectively, CAGR will be 30% from 2020 to 2023, and the current share price corresponds to 29 / 22 / 17 times of PE, maintaining the “buy” rating.
Risk tips: the development of the third-party engineering evaluation industry is less than expected, the risk of accounts receivable, the development of new business is less than expected, the risk of intensified market competition, etc
