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中信证券:物业服务企业盈利能力触底回升 推荐头部蓝筹公司和中小型高股息企业

CITIC Securities: Profitability of property service companies bottomed out and rebounded, recommending leading blue-chip companies and small and medium-sized high-dividend companies

Zhitong Finance ·  08/30/2023 09:33

The Zhitong Finance App learned that CITIC Securities released a research report saying that in mid-2023, the weighted gross profit margin of the sample company was 16.5%, an increase of 0.28 ppts over the same period last year, and remained highly stable. The semi-annual report once again proves that the profitability of property service companies has not declined over time. It is true that enterprises need to make efforts to consolidate profitability, but the industry as a whole is sufficient to maintain a reasonable and reliable level of profitability. The aging of housing and the increase in the stock market expansion ratio are not worth worrying about; technological empowerment and management process optimization are even more worth looking forward to. The bank recommended leading blue-chip property companies and small and medium-sized high-dividend property service companies.

The main views of CITIC Securities are as follows:

In mid-2023, the profitability of leading property management companies was very stable.

In mid-2023, the weighted gross profit margin of the sample enterprise was 16.5%, an increase of 0.28 ppts over the same period last year, and remained highly stable. The enterprise management scale effect is beginning to take effect. Even though competition for outreach became more intense in the first half of this year, the sample enterprise sales management fee rate still fell 0.68 percentage points to 6.76% year-on-year. Under the multiple effects of an increase in gross margin and a decline in sales management rates, the net interest rate of the sample enterprise increased by 0.4 percentage points to 7.3%. In the first half of 2023, the net profit of the sample company grew by 24.6%, an increase of 13.7 percentage points over the same period last year, greater than the 17.8% growth rate on the revenue side. In the first half of 2023, the sample enterprise's gross profit margin for basic property services was 13.1%, up 0.62 percentage points from the same period last year. (Note: The bank selected companies with a current market capitalization greater than HK$10 billion and which have published their 2023 semi-annual reports as sample companies)

Multiple factors contribute to a high degree of stability in the profitability of property management companies.

The pricing and payment rates of property service companies are rarely affected by short-term macroeconomic fluctuations, while labor costs have remained relatively stable. Enterprises can improve the service area of unit labor through management process optimization and technological empowerment. Businesses can also develop value-added services. These efforts are all sufficient to offset the problems brought about by the increase in business ownership and the increase in operation and maintenance costs. History has proved that there is no systematic downward pressure on the profitability of the industry. The bank expects that the gross margin of basic property management can be stabilized at a reasonable level.

Community value-added services are transforming from opportunism to deep product cultivation.

In the first half of 2023, the profitability and gross profit share of value-added services in the leading enterprise community increased. The enterprise community value-added service product structure was further optimized, and developed from opportunism to product power. Some enterprises began to shrink less profitable businesses, while at the same time concentrating on developing more advantageous and promising service projects. The gross profit growth rate of value-added services for owners of leading enterprises in the first half of the year was 25.3%, significantly higher than the revenue growth rate of 15.8%. The gross margin increased 2.3 percentage points to 30.5% compared to the same period last year, accounting for an increase of 1 percentage point to 20% of the total gross margin.

Value-added services for non-owners have shrunk further, and the direct impact of the development cycle on the industry is getting weaker and weaker.

Affected by the decline in sentiment in the development industry, the gross margin of value-added services for non-owners of leading enterprises declined further. In the first half of 2023, the gross profit margin for value-added services for non-owners of the sample enterprise was 18.8%, down 2.5 percentage points from the same period last year. It has been declining for two consecutive years, and the decline is faster than in the middle of last year. The share of gross profit from value-added services from non-owners of most enterprises has declined further, and the share of overall gross profit has dropped to 14%. The bank believes that the share of gross profit from value-added services that are not owned by enterprise owners may decline further in the future, and gross margin may also decline further. Case office services and consulting services, which are far connected to the main property service business, have had an impact on business contraction for a while, but they have actually increased the anti-cyclical nature of the industry.

Risk Factors:There is a risk that a downturn in the real estate industry exceeding expectations will affect corporate profit levels. There is a risk that a decline in macroeconomic sentiment will affect the profit level of the public construction business. There is a risk that intense competition in the industry will affect the profitability level of new development projects.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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