07/2016 07/2016 07/2016 Fortune Cookies Company visit Not Rated Greentown Service Group Co Ltd Sector: Industrials Industry: Commercial Services & Supplies Sub-industry: Diversified Support Services Key data Price (HK$) 2.90 52wk High (HK$) 3.10 52wk Low (HK$) 1.99 Market Cap (HK$m) 8,056 Market Cap (US$m) 1,039 Shares outstanding (m) 2,778 Free float (%) 20.2 1M relative return 0.0 6M relative return - YTD relative return - HSCEI 9,687 Dividend yield (FY15) 0.0 US$:HK$ 7.7569 Inst Ownership (Top 5, %) ORCHID GARDEN INVEST 36.72 HAIRONG LI 20.28 MASS WISDOM GROUP LT 10.8 GREENTOWN CHINA HOLD 5 CHINA ORIENT ASSET M 3.17 Analyst Kris Li A0230511040076 ARG379 Email: lihong@swsresearch.com Phone: (+86) 2329 7818 ext 7223 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 (HK$) Volume (RHS) Price (m) 70 60 50 40 30 20 10 0 绿城服务集团 (2869:HK) 中期业绩符合预期增长有质有量 Financial Table 总部位于杭州的高端物业服务供应商绿城服务集团公布中期业绩显示, 公司今年上半年实现总收入 16 亿元 ( 同比增长 30%), 核心净利为 1.4 亿元 ( 剔除上市费用影响后, 同比增长达 51%), 基本符合预期 毛利率全面提升 按业务板块来看, 物业管理服务收入为 12 亿元 ( 同比增长 29%), 占总收入比例达 71%, 顾问咨询服务收入为 3.1 亿元 ( 同比增长 20%), 而同期园区增值服务收入大幅提升至 1.6 亿元, 同比涨幅达 68% 鉴于三大业务板块毛利率均有所提升, 公司综合毛利率从去年上半年的 17.6% 提高 1.1 个百分点至 18.6% 具体来看, 由于公司平均物业管理费用从去年上半年的 2.94 元 / 平米 / 月进一步提升至 3.06 元 / 平米 / 月, 物业管理服务毛利率从 9.7% 提升 0.7 个百分点至 10.4%; 同期, 因公司策略性减少工地保安等利润率较低的合同, 提升平均合同收入, 顾问咨询服务毛利率从 35.7% 提升 1.1 个百分点至 36.8%; 此外, 增值服务毛利率仍维持高位在 45.4%, 相较于去年同期为 44.0%, 在 O2O 平台的注册用户数量保持高速增长的同时, 增值服务产品服务组合不断完善 扩张稳中有进 截至 6 月末, 公司产生收入的总在管合同建筑面积从去年年中的 6900 万方增长至 9140 万方 ( 同比增长 32.5%), 同期储备合同面积从 7280 万方增长至 9900 万方 ( 同比增长 36%), 为保证公司未来几年的管理面积增长和收入来源提供了坚实基础 公司管理层表示将继续重点关注目前已有布局的经济较为发达地区, 包括杭州 ( 占总在管合同面积的 18.7%), 大杭州地区 ( 占比 26.3%) 和长三角地区 ( 占比 35.6%), 并预计随着新交付项目占比提升带来的结构优化会为平均物业管理费用继续稳步提升提供基础 此外, 公司管理层表示将在未来继续关注更多可能的收并购机会, 主要目标为具有大量储备面积的高质量物业管理公司 同业比较 公司顺利地将其业务范围拓展到其他独立开发商开发的物业, 截至 6 月末, 来自绿城中国 (3900:HK) 开发物业的收入占总收入比例从去年的 7.7% 进一步降低至 4.6%, 而同样定位高端市场具有开发商背景的中海物业 (2669:HK) 合同管理面积中, 来自其母公司中海外 (688:HK, 买入 ) 自建物业的占比高达约 90%, 同期目前在管面积最大的彩生活 (1778:HK, 增持 ) 则约 97% 的合同在管面积来自外部获取 就物业费收取方式而言, 绿城服务高达 98% 的面积以包干制方式管理, 而中海物业和彩生活在管面积中包干制项目占比则分别为 和 10% 估值水平 绿城服务自 2016 年 7 月 12 日在香港首次上市以来, 累计收益超过 46%, 目前估值为 26 倍 16 年 PE, 与同业中海物业相近, 而彩生活估值则为 15 倍 16 年 PE HK$ 12A 13A 14A 15A Revenue (m) 1,672 2,205 2,919 Growth (%) - 31.9 32.4 Net income (m) 79 149 198 Growth (%) - 87.5 32.8 Diluted EPS - - - Growth (%) - - - ROE (%) - 77 116.8 Dividend yield (%) - - - Free cash flow per share - - - PE (x) - - - PB (x) - - - EV/Ebitda - - - Debt/equity 19 46 120.91 Source: SWS Research, Bloomberg Please also find SWS Research on your Bloomberg terminal at SWSE <GO>, Thomson Reuters, FactSet and S&P Capital IQ.
Hangzhou-based high-end property management services provider Greentown Service reported 1H16 revenue of Rmb1.3bn (+30% YoY) and core earnings of Rmb140m (+51% YoY, after excluding the effect of listing expenses), largely in line with consensus expectations. Improved margins. Property management services generated revenue of Rmb1.2bn (+29% YoY), accounting for 71% of total revenue, while property consulting services revenue reached Rmb313m (+20% YoY) and value-added services revenue hit Rmb158m (+68% YoY). Overall gross margin rose 1.1ppts YoY to 18.6%, as gross margins in all three segments improved, with a Rmb0.12/sqm YoY increase in average monthly management fees to Rmb3.06/sqm lifting property management services margin 0.7ppts YoY to 10.4%, a reduction in lower-margin construction site security services contracts property consulting services improving segment margin 1.1ppts YoY to 36.8% and rapid growth in value-added services margin gaining 1.5ppts YoY to 45.4% as registered users on the company s online-to-offline (O2O) platform grew rapidly. Steady expansion. The company s contracted revenue-bearing gross floor area (GFA) rose from 69.0msqm as of end-june 2015 to 91.4msqm as of end-june 2016 (+32.5% YoY), and reserve GFA increased from72.8msqm to 99.0msqm (+36.0% YoY). The company continues to focus on regions with higher GDP including Hangzhou (18.7% of total contracted GFA), Greater Hangzhou (26.3%), Yangtze River Delta (35.6%), and expects steady increase in its average management fees given gradual structural optimisation to raise the proportion of new properties. In addition, the company anticipates conducting more acquisitions, mainly targeting high-quality service providers with rich reserves of GFA to be delivered in future. Peer comparison. The company succeeded in expanding its coverage to residential properties developed by third-party developers other than securing contracts from Greentown China (3900:HK N R), which contributed just 4.6% of total revenue in 1H16, (15A: 7.7%). By contrast, comparable peer China Overseas Property (2669:HK N R), with its developer background, gained c.90% of its contracted GFA from properties developed by its parent company COLI (688:HK, BUY), whereas GFA from external properties amounted to 97% for Colour Life (1778:HK, O-PF). As for charging method, 98% of the company s managed GFA was charged on a lump sum basis, while lump sum charges for China Overseas Property amounted to and Colour Life charged just c.10% of GFA on a lump sum basis. Valuation. Greentown Service recorded an accumulated return of since IPO on 12 July 2016 of c.46%, to trade at 26x 16F PE, similar to China Overseas Property s valuation at 26x 16E PE, whereas Colour Life trades at 15x 16E PE.
Improved margins Hangzhou-based high-end property management services provider Greentown Service reported 1H16 revenue of Rmb1.3bn (+30% YoY) and core earnings of Rmb140mn (+51% YoY after excluding the effect of listing expenses), largely in line with consensus expectations. Property management services generated revenue of Rmb1.2bn (+29% YoY), accounting for 71% of total revenue, while property consulting services revenue reached Rmb313m (+20% YoY) and value-added services revenue hit Rmb158m (+68% YoY). Overall gross margin rose 1.1ppts YoY to 18.6%, as gross margins in all three segments improved, with a Rmb0.12/sqm YoY increase in average monthly management fees to Rmb3.06/sqm lifting property management services margin 0.7ppts YoY to 10.4%, a reduction in lower-margin construction site security services contracts property consulting services improving segment margin 1.1ppts YoY to 36.8% and rapid growth in value-added services margin gaining 1.5ppts YoY to 45.4% as registered users on the company s online-to-offline (O2O) platform grew rapidly. Fig 1: Breakdown of total revenue by segments 3,500 (Rmb mn) 3,000 Cagr in 2012-2015: 33% 2,500 2,000 1,500 1,000 500 30% YoY Fig 2: Gross profit margins by segments 45.8% 46.7% 47.5% 42.8% 44.0% 45.4% 40% 39.6% 36.4% 35.9% 33.9% 35.7% 36.8% 20% 8.6% 10.2% 9.7% 10.4% 6.1% 5.6% 0 2012A 2013A 2014A 2015A 1H15 1H16 Property mgmt services Property consulting services Community value-added services 0% 2012A 2013A 2014A 2015A 1H15 1H16 Property mgmt services Property consulting services Value-added services Steady expansion The company s contracted revenue-bearing gross floor area (GFA) rose from 69.0msqm as of end-june 2015 to 91.4msqm as of end-june 2016 (+32.5% YoY), and reserve GFA increased from72.8msqm to 99.0msqm (+36.0% YoY). The company continues to focus on regions with higher GDP including Hangzhou (18.7% of total contracted GFA), Greater Hangzhou (26.3%), Yangtze River Delta (35.6%), and expects steady increase in its average management fees given gradual structural optimisation to raise the proportion of new properties. In addition, the company anticipates conducting more acquisitions, mainly targeting high-quality service providers with rich reserves of GFA to be delivered in future.
Fig 3: Breakdown of contracted revenue-bearing GFA by property type 120,000 ('000 sqm) 100,000 32% YoY Cagr in 2012-2015: 23% 80,000 60,000 40,000 20,000 0 2012A 2013A 2014A 2015A 1H15 1H16 Residential communities Non-residential properties Fig 4: Geographical breakdown of total contracted GFA, June-2016 Pearl River Delta Business Region 5% Bohai Economic Rim 12% Yangtze River Delta (excl. Hanghzou and Ningbo) 36% Other Regions 13% Hangzhou (excl. Yuhang) 19% Yuhang 7% Ningbo 8% Peer comparison The company succeeded in expanding its coverage to residential properties developed by third-party developers other than securing contracts from Greentown China (3900:HK N R), which contributed just 4.6% of total revenue in 1H16, (15A: 7.7%). By contrast, comparable peer China Overseas Property (2669:HK N R), with its developer background, gained c.90% of its contracted GFA from properties developed by its parent company COLI (688:HK, BUY), whereas GFA from external properties amounted to 97% for Colour Life (1778:HK, O-PF). As for charging method, 98% of the company s managed GFA was charged on a lump sum basis, while lump sum charges for China Overseas Property amounted to and Colour Life charged just c.10% of GFA on a lump sum basis. Fig 5: Breakdown of contracted GFA by sources of properties Fig 6: Breakdown of contracted GFA by charging method (commission vs. lump sum) 100% 80% 40% 95% 90% 22% 78% 3% 97% 100% 100% 80% 40% 98% 98% 12% 88% 20% 0% 5% 10% Vanke Property COPL Greentown Color Life Zhong Ao Service Group Service Group Home Group % of GFA from self-developed properties % of GFA from external properties 20% 0% 2% 2% Greentown Zhong Ao Service Group Home Group 40% 40% Vanke Property COPL Colour Life Service Group % of GFA managed under lump sum basis % of GFA managed under commission basis
Fig 7: Comparison of average management fee Fig 8: Community coverage of O2O platform, 2014-2016 4.0 3.0 2.0 1.0 0.0 (Rmb per sqm/month) Average level in 20 major cities: Rmb2.07 per sqm/month 1.50 Color Life Service Group 1.82 Zhong Ao Home Group 2.50 Vanke Property 3.06 Greentown Service Group 3.50 COPL Average property management fees for residential properties Average property management fees for residential properties in 20 major cities 800 72% 80% 63% 600 44% 400 34% 38% 40% 200 20% 7% 2% 0 0% Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Jun-16 Covered communities Total communities Coverage ratio Valuation Greentown Service recorded an accumulated return of since IPO on 12 July 2016 of c.46%, to trade at 26x 16F PE, similar to China Overseas Property s valuation at 26x 16E PE, whereas Colour Life trades at 15x 16E PE. Fig 9: Valuation and TP Company Code Market Cap Target Price PE ( x ) Rating (HK$ bn) (HK$) 16E 17E Greentown Service 2869 HK 8.1 N-R - 26 17 Colour Life Services 1778 HK 5.8 BUY 7.26 15 12 China Overseas Property 2669 HK 5.3 N-R - 26 21 Average 23 17 Note: Forecasts for 2869:HK and 2669:HK are based on management guidance
Appendix Income Statement HK$m 2013 2014 2015 Revenue 1672 2205 2919 Operating Income 110 200 284 Pretax Income 108 199 278 Income bef XO Items 83 150 203 Net Income 79 149 198 Basic EPS Before XO Items - - - Basic EPS - - - Diluted EPS Before XO Items - - - Diluted EPS - - - Dividends per Share 0 0 0 Ebitda 120 211 297 Return on Common Equity - 77.3 116.8 Balance Sheet HK$m 2013 2014 2015 Total Current Assets 751 1068 1377 Total Long-Term Assets 208 234 265 Total Assets 960 1302 1642 Total Current Liabilities 731 1071 1472 Total Long-Term Liabilities 19 14 21 Total Liabilities 750 1,085 1,493 Total Shareholders' Equity 210 217 149 Shares Outstanding - - - Book Value per Share - - - Tangible Book Value / Sh - - - Shareholder Equity/Total Liab 22 17 9 Cash Flow Statement HK$m 2012 2013 2014 Net Income 79 149 198 Depreciation and Amortisation 10 11 13 Change in Working Capital - - 23-93 Cash - Operating Activities 172 333 504 Capital Expenditures -10-104 - 58 Cash - Investing Activities - 74-168 129 Cash - Financing Activities -8-27 - 235 Net Changes in Cash 91 138 398 Free Cash Flow 162 229 446 Free Cash Flow / Basic Sh - - - Free Cash Flow / Diluted Sh - - - Cashflow per Share - - -
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