【公司研究】綠城服務 (2869 HK) – 1H19扎實增長

• Adj. net profit grew 24.8%. In 1H19, Greentown Service recorded revenue of RMB3,663mn, up 25.1% YoY. Growth of 1H19 topline was the slowest for the past three years due to enlarging base and mild increase in managed GFA during the period. Property management/Consulting Services/Community Living Services segment recorded 21.7%/30.0%/34.8% YoY growth. Gross margin of Property management/Consulting Services remained stable at 11.9%/38.1% (FY18:11.4%/38.0%). Gross margin of Community Living Service recovered from 25.5% in FY18 to 31.3% in 1H18. We believe this is mainly due to Community products and services, which recorded 86% growth and accounted for 33% of Community Living Service, thus driving up the segment margin. Net profit to shareholders recorded 2.2% growth. Excluding SBC, adj. net profit for the Period was RMB270mn, up 24.8% YoY, which is consistent with the growth of topline.

  

• 184mn sq m managed GFA with 207mn sq m. As of 1H19, managed GFA of the Company reached 184.2mn sq m, net increase of 33.4mn sq m from FY18-end. Reserved GFA continued to exceed the managed GFA with 207mn sq m. ASP of property management service was RMB3.16/sq m/month, slightly increased from RMB3.15/sq m/month in FY18. We think Greentown Service’s property management service is value for money. Gross margin of property management service can be maintained and realize a steady annual improvement.

  

• Continued investment in community education. On 5 Jul 2019, Greentown Service acquired 56% interests in Montessori Academy Group Holdings Pty Ltd (MAG) for a cash consideration of AUD50.27mn, which is equivalent to RMB242.6mn. MAG engages in high-end western-style early childhood education. Compared to peers, Greentown Service has put a lot of effort and money in community education business. In 1H19, sub-segment revenue recorded RMB24.5mn revenue, up 57.2%. We believe there exists a strong demand in developed region like Hangzhou for nursery services of children, but we also think the return of such business may take time to realize and require more professional operation, higher standard quality control and more importantly, continued investment in brand building and talent acquisition. Uncertainties may arise during development.

  

• Raise TP, maintain BUY. We derive adjusted net profit to shareholder of FY19/20 to be 638mn/785mn. We slightly raise our TP from HK$7.50 to HK$7.80 which is equivalent to 30.5/25.0x FY19/20E P/E, maintain BUY.