Good Performance Is Still Adjusted To Lower Target Price

Over the past year, property service companies have been sought after in the capital market.

The "black swan" event of the new crown epidemic in 2020 makes the role of property management services more prominent. Moreover, compared with other industries, the performance of property services is stable. In a short time, the stock prices of property enterprises are all red, and securities companies, investment banks and ordinary investors act quickly, and hot money is pouring in.

With this gust of wind, many real estate enterprises with long-term low stock prices began to realize the value of property service track. In addition, financing under the "three red lines" was difficult, they split their property enterprises and put them on the market.

On the one hand, in order to broaden the financing channels, on the other hand, it is to share the joy of the sharp increase in market value. In the past year or two, the HKEx has ushered in more than a dozen property companies, and the mission of these "recruits" is almost the same.

No matter the leading enterprises or small and medium-sized property enterprises have tasted the sweetness in this carnival, but the times have changed, the property track is now stable again, and the development bottleneck of small and medium-sized enterprises is gradually emerging. Even if the quality of the answers is still good, investors have begun to underestimate their development potential.

The neighborhood of the times is a typical example. In 2020, the neighborhood's income will reach 1.758 billion yuan, up 62.6% year-on-year; the net profit will be 237 million yuan, with a year-on-year increase of 148.6%. From the growth point of view, it is in order, but after that, investment banking institutions issued research reports one after another to lower its target price, which means that it is not easy for small and medium-sized enterprises to gain favor.

"Small and medium-sized properties can not give valuation, from the company's management and future growth, the development can not reach the expected effect." A property services analyst who did not want to be named told the 21st century economic report.

Small and medium-sized enterprises in the external expansion is indeed not outstanding, and the parent company not only can not provide the necessary support, but also turns the property platform into a financing channel, which has become the shackles of the development of small and medium-sized enterprises. How can small and medium sized enterprises break through themselves?

Underestimation under high growth

From the perspective of operating revenue and profit indicators, this annual report of time neighborhood is in line with expectations.

According to the annual report, in 2020, the times neighborhood will achieve an income of 1.758 billion yuan, a year-on-year increase of 62.6%; the net profit will be 237 million yuan, a year-on-year increase of 148.6%; the annual core net profit of the company's owners will be 233 million yuan, with a year-on-year increase of 93.7%.

But the annual report, which grew well, did not satisfy investment banks. After the release of the annual report, BOCOM international also issued a research report to maintain the "buy" rating of the neighborhood of the times. The target price was lowered from HK $15.36 to HK $13.66 from 11%.

Goldman Sachs also released a research report, which lowered the target price of times neighborhood by 14.3% from HK $14 to HK $12, maintaining its "buy" rating.

According to the report, the bank lowered its average revenue by 8% from 2021 to 2023 to reflect the intensifying competition in the industry and the group's weaker balance sheet, the decline in total floor area from acquisition, and the increase of gross profit margin of property management services by about 1 percentage point, but the gross profit rate of community value-added services decreased by 2 percentage points. Therefore, it is expected that the gross profit rate will be about 30% from 2021 to 2023, and the average forecast of earnings per share will be lowered by 5%.

The point made by Goldman Sachs in this report is not groundless.

On the one hand, the profit margin of the neighborhood of the times has no prominent advantage compared with the peers. In 2020, the era neighborhood net profit margin will increase by 4.7 percentage points to about 13.5%, and the core net profit rate should be increased by 2.1 percentage points to 13.2%. But if compared with peers, it is not outstanding.

For comparison, the net profit margin of Hengda property, a leading enterprise, is 25.5%, while that of Shimao service, a medium-sized enterprise, is 17.8%, both higher than that of the neighborhood.

On the other hand, in terms of debt level, the debt control of the neighborhood is also weaker than that of peers. The annual report shows that in 2020, the total current liabilities of the times neighborhood will increase from 584 million yuan in 2019 to 852 million yuan in 2020, and the new current liabilities will be 270 million yuan.

In the era of neighborhood trade accounts receivable, the part from related parties also showed a significant increase. According to the annual report, in 2020, the accounts of time neighborhood from related parties were 388 million yuan, compared with 112 million yuan in the same period last year.

Time neighborhood is a typical small market value property stocks. By the end of March 17, 2021, the times neighborhood had closed at HK $6.42 per share, with a total market value of HK $6.328 billion and a P / E ratio of 21.55. According to the statistics of Leju finance and economics in January 2021, among the 42 property enterprises, the average p / E ratio was 55.31 times, and the times neighborhood's P / E ratio did not outperform its peers.

A middle-level manager of a leading property management company, who asked for anonymity, told the 21st century economic report that everyone in the stock market is looking for the leader. As a relatively optimistic industry, the logic of the property industry is similar to that of the public. There are reasons for the high market value of the leading companies. Either their future reserves are high, or the market expansion ability is strong, and the expectation is particularly good, "This logic, small and medium-sized properties are adjusted to lower the target price is very easy to understand.".

Acquisition and merger with weak development

Although the property management industry is a promising industry in the capital market, the business logic of this industry is not complicated. Even if there is imagination space for technology empowerment and value-added services, under the current situation that the industry concentration is not high, external expansion is still the only choice for the property management industry to outperform peers.

However, small and medium-sized property enterprises do not have much bargaining power in this respect.

According to the analysis of the 21st century economic report by the above analysts, leading property companies and companies with less fame may be more likely to get management rights in the same residential area. M & A is the same time. When you sell, you should consider your owners' ideas. If the owners sell to a less famous property company, the owners will not agree.

Judging from the scale of the neighborhood's efforts in the past year, there is also evidence for this concern.

In 2020, the scale of era neighborhood will further break through. However, in the current situation of leading property enterprises, the future growth level of era neighborhood may face greater pressure.

In the past year, there were three major acquisitions of time neighborhood, namely, the acquisition of 100% equity of Guangzhou Haoqing property, 100% equity of Guangzhou Yaocheng property, and 51% equity of Shanghai Kejian property.

According to the annual report, as of December 31, 2020, the total contracted construction area of Shidai neighborhood is about 112 million square meters, with a year-on-year increase of 92.4%; the total construction area under management is 98.7 million square meters, up 112% year-on-year.

This year, the development of era neighborhood will be set at "stability is more important than fast", and the management has also said frankly that it will be cautious in the acquisition and merger.

"We also see that the good and bad are mixed in the market, especially in this round of upsurge in the development of the property industry, resulting in less and less high-quality standards left in the market. Therefore, at present, we are cautious, careful in the acquisition negotiations and prudent in the valuation judgment of the subject matter. " Wang Meng, executive director and chief executive of time neighborhood, pointed out.

The middle-level managers of the leading real estate enterprises said, "if the company is small, it will have less capital for listing and financing, and the professional ability and overall strength of the company will be weaker. In this way, when competing in the market, the company's ability to study and judge the market and obtain resources will be poorer. This is the whole environment. This is the trend. The strong will always be strong, and the weak will gradually become weak. "