- August 27, 2021
We published a research report on Yincheng LS (1922.HK) on the back of its recent interim results announcement. Please kindly see the full report attached.
Key Highlights:
We maintain our Buy rating on Yincheng Life Service on the back of its 1H21 results announcement, putting it on track to deliver an estimated 30.5% YoY earnings growth for 2021E. It is currently trading at deeply discounted valuations of 9.6x 2021E P/E (Industry average: 18.4x).
- We believe Yincheng Life Service is undervalued with its 9.6x 2021E P/E, considering that it is on track to deliver an estimated 30.5% YoY growth in 2021E.
- We also believe Yincheng’s independency from its parent developer remains one of the strongest among HK list co’s, with ~84% of its GFA Under Management from third-party property developers.
- Yincheng Life Service announced its 1H21 results, which are mostly in line with our expectations. Its revenue grew 41% YoY to RMB588mn, completing 47% of our full-year revenue estimate, while its core net profit grew 36% YoY to RMB40.2mn, representing 46% of our full-year earnings estimate.
- During 1H21, Yincheng Life Service further expanded into the non-residential property management which offers higher GP margins (16.4% vs 6.7% for residential). Nonetheless, we believe residential properties will remain as the primary focus for the company due to its higher synergies and contribution to the community value-added services segment.
- We believe our DCF-based Target Price of HK$7.53/sh, which implies a Target 2021E P/E of 18.1x, better reflects the estimated 30.5% core net profit growth.
