In recent years, the property industry has undergone a series of structural changes and business adjustments to adapt to the constantly evolving market environment and customer demands. Faced with market fluctuations and economic pressures, it can be observed that numerous property companies have adopted more prudent expansion strategies, focusing on internal optimization and enhancing service quality.
Against the backdrop of the continuous recovery of the macroeconomy, coupled with active guidance and support at the policy level, the industry as a whole has shown signs of gradual recovery this year. Companies maintain a cautiously optimistic attitude towards the long-term development of the industry and seek new growth points and business opportunities during the market recovery process.
As a nationally renowned service provider for a better life and smart cities, Kangqiao Yue Life (02205.HK) has demonstrated a relatively stable operation by actively enhancing its service capabilities and exploring new market opportunities.
On August 28, Kangqiao Yue Life released its interim financial results for 2024. The financial report shows that in the first half of the year, the company achieved a revenue of approximately 487 million yuan (in RMB, same below), a year-on-year increase of 9.5%, with a gross profit of about 106 million yuan and a net profit attributable to the parent company of about 43 million yuan.
So, how should we understand the value of Kangqiao Yue Life through this financial report?
1. Quality-driven steady growth, continuously strengthening the foundation of safety
From this financial report, Kangqiao Yue Life demonstrates the following major highlights:
a. The company has abundant cash flow, and internal efficiency continues to deliver performance growth
Considering the overall industry situation, Kangqiao Yue Life has achieved relatively stable performance in key financial indicators such as revenue. These achievements are closely related to the company's efforts in cash flow management and internal efficiency.
Despite facing industry adjustments, Kangqiao Yue Life's gross profit margin has remained relatively stable. In the first half of the year, the comprehensive gross profit margin was 21.7%, demonstrating the company's advantage in cost control.The company's cash flow is in good condition. As of the end of June this year, cash and cash equivalents reached approximately 337 million yuan. This abundant cash reserve not only provides sufficient liquidity for its daily operations but also lays a solid foundation for future investments and expansion.
In an environment of economic uncertainty, such cash flow performance further proves Kangqiao Yue's mature capabilities in risk management and efficient operations.
In addition to the good cash flow situation, Kangqiao Yue's stable performance is also due to the improvement of internal efficiency. The company has achieved significant results in cost control and service quality through measures such as optimizing organizational structure, improving operational efficiency, and adopting technological means. Financial reports show that in the first half of the year, the company's sales and marketing expenses decreased by 19.0% year-on-year, and administrative expenses decreased by 17.8% year-on-year.
B. Steady and efficient scale expansion, continuous improvement of independence
In the first half of the year, Kangqiao Yue continued to show a steady and efficient posture in scale expansion.
As of the first half of this year, the company provides property management services and value-added services in 35 cities in China, with 303 managed projects and a managed building area of about 43.2 million square meters, a year-on-year increase of 17.1%, and a contracted building area of about 71.1 million square meters, a year-on-year increase of 8.5%. The steady growth in scale not only reflects the company's attractiveness in the property market but also its strong ability to obtain new projects.
It is worth noting that the company's independence is unique in the entire property management industry.
Financial reports show that as of the first half of this year, the managed area of the company, which comes from third-party property developers, is about 34.5 million square meters, accounting for 79.8%. In the contracted area, the area from third-party property developers is about 58.4 million square meters, accounting for as high as 82.2%.
In addition, the company's non-residential properties continue to maintain a fast growth trend and also show the advantage of independence. Financial reports show that as of the first half of the year, Kangqiao Yue's managed building area of non-residential properties is about 7.5 million square meters, a year-on-year increase of 22.4%, among which the proportion of non-residential properties from third-party property developers is as high as 99.2%.
It can be seen that Kangqiao Yue's independence is not only reflected in the diversification of business sources but also in the company's ability to respond more flexibly to market changes and quickly respond to customer needs.Overall, the company's steady expansion in scale and enhancement of independence complement each other, forming a virtuous business cycle. On one hand, the expansion of scale brings more resources and market influence to the company. On the other hand, the enhancement of independence strengthens the company's market competitiveness and risk resistance capabilities. This synergistic effect not only places Kangqiao Yue Living in a more favorable competitive position in the property management industry but also lays a solid foundation for its long-term sustainable development.
**Diversified business layout, demonstrating sustainable growth momentum**
Looking at the company's revenue structure, in addition to property management services, the company is also continuously opening up new growth points around community value-added services, non-owner value-added services, and urban services. The company has established three product lines: "Yue Shangguan," "Yue Chengfu," and "Yue Shenghuo," and continues to deepen the diversified business model of "property services + life services," leveraging the advantages of value-added services and extending the boundaries of services.
For instance, in the area of urban services, Kangqiao Yue Living has demonstrated its forward-looking market insight by laying out in advance and actively participating in diversified service projects such as urban sanitation and public facility management. This not only responds to the demand for high-quality services in the urbanization process but also brings new business growth points to the company.
Currently, the company's urban service business segment is maintaining rapid growth. In the first half of this year, it achieved a revenue of 37.486 million yuan, a year-on-year increase of 32.0%. As the company continues to delve into the field of urban services, Kangqiao Yue Living's first-mover advantage will gradually be transformed into sustained performance growth.
From traditional property management to community value-added services and then to urban services, the continuous exploration reflects the innovation of Kangqiao Yue Living's business model and the expansion of its business fields. Based on this, it not only enhances the company's profitability beyond traditional property management services but also injects new vitality into the company's long-term development.
With the continuous enrichment of service content and the continuous improvement of service quality, Kangqiao Yue Living is expected to occupy a favorable position in the fierce market competition and achieve sustained and stable growth.
2. Continuously consolidating the operational foundation with high-quality service strength, and improving quality and efficiency through technology empowerment
Looking at the development history of Kangqiao Yue Living, it is not difficult to find that while pursuing scale expansion, the company insists on creating high-quality service strength, striving to find a balance between quality, scale, and benefits.
In the field of property management, scale effects are undoubtedly important, but mere scale expansion is not advisable. Only growth based on a foundation of high-quality services has the capability for sustainable development.Thus, it can be observed that while expanding its service scale, Kangqiao Yue Living insists on enhancing service quality.
The company not only focuses on basic property services but also strives to create a warm community culture to strengthen neighborhood connections and community cohesion. By continuously exploring and innovating service models, it meets homeowners' pursuit of high-quality living. This has also enabled Kangqiao Yue Living to continuously win the trust of homeowners and market reputation during the process of scale growth.
At the same time, as a traditional labor-intensive field with "relying on manpower" as its core, the core barrier of the property management industry lies in how to improve efficiency. Especially as technology advances and the industry develops, empowering business development through cutting-edge technology has become an important issue in the property management industry.
Against this backdrop, Kangqiao Yue Living has introduced or developed advanced information technologies, such as the Internet of Things, big data analysis, and artificial intelligence, to create an online service touchpoint system that includes a data visualization operation command system, intelligent equipment and facility systems, and the Kangyun Youjia APP. It continuously optimizes property management processes, improves management efficiency, and service experience, thereby building its own core competitiveness.
Despite fierce competition in the property service industry, Kangqiao Yue Living still insists on cost control and service quality as its core, adhering to the service bottom line of "quality-price equivalence, the best at the same price". By providing cost-effective services, it attracts and retains customers. In this process, the company also insists on creating an efficient organizational management system, integrating technology into the subtleties of operations, thereby effectively reducing operating costs and improving service efficiency and profitability.
Based on this, it not only brings higher economic benefits to the company but also provides solid financial support for its continuous scale expansion and service quality improvement.
3. The industry returns to normalized operations, and the value of high-quality property management stands out.
In the past few years, the deep adjustment of the real estate market has also severely impacted the confidence of the property management industry in the market.
Now, with policies continuously increasing support for the stability of the real estate market, the industry is returning to normalized operations. Under this transformation, the value of high-quality property companies is becoming increasingly prominent.
The market's recognition of high-quality property companies is not only reflected in the high evaluation of their financial stability and stable performance but also in the rediscovery of their long-term growth value.From a forward-looking perspective, companies that can maintain long-term stable operations and fulfill shareholder returns will be the focus of market attention. Core indicators are also concentrated on the dividend strategies of property companies. In this regard, Dongwu Securities has previously stated that as the industry returns to a normal development pace, the business model of property companies should match a higher dividend payout ratio. Enhancing and maintaining a higher dividend is a normal decision in line with industry development. It is evident that institutions have expectations for the dividends of property companies.
Looking at the latter, a stable operating capability and the continuous expansion of new growth curves will open up new growth spaces for property companies and provide the market with a new window to re-evaluate the value of property companies.
Focusing on Kangqiao Yue Life, its current growth drivers come from two aspects: first, horizontal expansion of scale; and second, vertical extension layout to improve the diversified business matrix. The company has already formed a certain brand influence, and with abundant cash on hand, it is expected to continuously expand its development boundaries through first-mover advantages and network effects, consolidate competitive barriers, and have ample long-term growth momentum.
If we extend the timeline, despite challenges in the external environment, the company has maintained cash dividends for three consecutive years since its listing, demonstrating a positive attitude towards rewarding shareholders. Subsequently, as performance continues to improve, this dividend expectation will continue to be consolidated and enhanced, also bringing confidence to the market.
Back in the capital market, the company's valuation has strong appeal. As of the close on August 28, the company's dynamic PE ratio is about 14 times, and the dividend yield is as high as nearly 9%. The company's performance growth has certainty, the quality of assets is highlighted, and the valuation is at a low level. It is believed that these factors will drive it to become the direction of market funds in the future.
Leave a Reply