20210827-招银国际-华润万象生活-01209.HK-Upside_from_mall_upgrade_and_office_commercial_operation__5页_787kb

CMB International Securities | Equity Research | Company Update Summary

Core Content

CR Mixc Lifestyle (1209 HK) is a property management company that has shown strong performance in the first half of 2021, driven by its shopping mall and office segments. The company's commercial operation is highlighted as a key growth driver, with the potential to significantly boost revenue and gross profit margins (GPM) over the next few years.

Main Points

• Strong 1H21 Results: The company reported a 138% YoY increase in earnings to RMB806mn, exceeding the profit alert range of 130-140%. Core profits grew by 116% YoY after excluding the fair value gain.
• Revenue Growth: Total revenue rose 28% YoY to RMB4.0bn in 1H21, with the commercial operation and PM segment contributing significantly.
• Gross Margin Improvement: Gross margin increased by 8ppt YoY to 32.2%, driven by a shift from lump sum to commission-based revenue recognition and strong performance in the shopping mall segment.
• Net Profit Margin: Net profit margin improved by 9.3ppt YoY to 20.1% in 1H21.
• PM Segment Growth: The PM segment grew 42% YoY in 1H21, supported by a 25% increase in managed GFA to 122mn sq m and a 150% YoY increase in Community VAS.
• Shopping Mall Segment: Despite a 7% YoY drop in revenue, the segment saw a 31.7ppt increase in GPM to 68%, with managed GFA rising to 7mn sq m.
• Office Segment Growth: The office segment grew 54% YoY to RMB690mn, with a 38% increase in managed GFA and improved occupancy rate to 83.3% in 1H21.
• Commercial Operation Expansion: The company plans to expand its commercial operation services, with the potential to cover more than 20% of its managed GFA in the future.
• Brand Building: Management is committed to increasing the number of high-end malls to 15-20 in the mid-term to enhance its branding and attract more third-party mall management opportunities.
• M&A and SOE Reform: The company is accelerating M&A activities in 2H21 and exploring opportunities in SOE reform to further its growth.
• Financial Outlook: The company is projected to achieve a revenue CAGR of >30% and GPM of 30% from 2021 to 2025.
• Valuation: Currently trading at 38x 2022E PE, slightly below its historical average of 40x.
• Ratings: The company is rated BUY, with a target price of HK$56.00 and an up/downside of +34.9%.

Key Information

• Earnings Summary: Net profit for FY21E is expected at RMB1,580mn, with a 33.8% YoY growth.
• Revenue Projections: Revenue is forecasted to grow to RMB11,957mn in FY22E, with a 33.1% YoY growth.
• Gross Profit Margins: Gross profit margin is expected to remain at 32.5% in FY22E, while net profit margin is projected at 17.7%.
• Share Performance: The stock has underperformed in the short term but shows potential for long-term growth.
• Shareholding Structure: CR Land & CR Holdings hold 73.7% of the shares, with 26.3% free float.
• Balance Sheet: The company has a growing equity base, with total equity expected to reach RMB15,037mn by FY22E.
• Cash Flow: Strong net cash from operating activities, with RMB2,743mn expected in FY22E.
• Liabilities: Total liabilities are projected to increase to RMB8,881mn by FY22E, but the company maintains a healthy current ratio of 2.9x.
• ROE and ROA: ROE is expected to reach 14.1% in FY22E, and ROA is projected to be 8.8%.

Analyst Recommendations

• BUY Rating: The company is a top pick due to its strong performance, growth potential, and strategic expansion.
• Target Price: HK$56.00, representing a +34.9% upside from the current price of HK$41.50.

Disclaimer

• The report is for informational purposes only and should not be considered as investment advice.
• CMBIS has investment banking relationships with the issuers covered in this report.
• The analyst certifies that the views expressed are based on personal analysis and not influenced by compensation or conflicts of interest.
• The report is intended for specific recipients and may not be reproduced or distributed without prior written consent.

Summary Table

Conclusion

CR Mixc Lifestyle is a promising player in the property services sector, with strong performance and strategic initiatives driving its growth. The company's focus on commercial operation expansion, M&A, and SOE reform positions it well for future success. With a BUY rating and a target price of HK$56.00, it remains a top pick for investors looking for growth in the sector.