- August 27, 2021
We published a research report on Aoyuan Healthy Life (3662.HK) on the back of its recent interim results announcement. Please kindly see the full report attached.
Key Highlights:
We believe that Aoyuan Healthy Life is beginning to reap the benefits of the series of M&As that it completed in 2020. We reiterate our Buy rating on Aoyuan Healthy Life as its 1H21 results beat our expectations.
- Revenue growth from its value-added services was stronger than expected, reflecting the company’s execution capabilities to integrate the newly acquired property management companies into its ecosystem, in our view.
- With the stock trading at 7.7x 2021E PE, we believe market has overlooked Aoyuan Healthy Life’s execution capability, in our view. We maintain our DCF-based Target Price of HK$10.75/sh, which implies a target 2021E P/E of 18.5x.
- Aoyuan Healthy Life’s 1H21 revenues came in at RMB1,003mn, up 83% YoY, while core net profit grew 70% YoY to RMB178.8mn, bringing it slightly ahead of our expectations as its 1H21 results already represent 50% of our full year estimates.
- The fact that Aoyuan can still achieve a GP margin of 34.6%, after acquiring property management companies which had low profitability pre-acquisition, reflects the value-add of Aoyuan during the M&A process and its execution capabilities.
- Aoyuan Healthy Life has introduced General Health and Wellness Services and Intelligent Engineering Services into separate revenue line items in its 1H21 results. We believe they will add synergies to its property management ecosystem to drive future growth, in our view.
