20230727-招银国际-滨江服务-03316.HK-1H23_preview__high_growth_secured_by_visionary_strategy_6页_971kb

Summary of Binjiang Service (3316 HK) Equity Research Report

Key Highlights

• Expected 32% YoY growth in net profit for 1H23E, driven by robust managed-GFA and revenue growth (>35% YoY), supported by early preparation for a worse-than-expected market.
• Managed-GFA is projected to increase 38% YoY to 49mn sq m in 1H23E, mainly due to stable delivery from the parent company and reserved-GFA accumulation.
• Segment revenue in 1H23E is anticipated to grow +39% YoY to RMB 7.4mn, influenced by high contract liabilities conversion.
• Business structure improvement involves reducing non-owner VAS business, with 5S VAS expected to grow >2.3x YoY to RMB 217mn, potentially reducing gross profit margin by 3 ppm to 28% due to margin shifts.
• Rating maintained at BUY with unchanged target price of HK$35.8, offering attractive valuation at 10-8x 2023/24E (P/E).
• Catalysts include 1H23 results and Stock Connect inclusion, while key risks involve a worse-than-expected property market.
• Strong cash flow management distinguishes the company, with a lower AR/revenue ratio compared to peers, and regional focus concentrated in Hangzhou.

Financial Projections

• Revenue and net profit are forecasted to grow steadily from FY21 to FY25E, with earnings CAGR of 30% over 22-25E.
• Valuation metrics show decreasing P/E from 15.7x to 5.8x, and P/B from 5.4x to 2.0x, with dividend yield increasing from 3.8% to 10.4%.
• ROE remains strong around 39.1%, indicating healthy profitability.

Recommendation

Reiterate BUY due to high growth potential, long-term strategy, and attractive valuation.