Main content: 1. nationalized layout completed - from the capital expenditure stage into the profit recovery stage: the company has built four strategic regions of North China, Shandong, Southwest and East China, basically covering all regions of the country except Xinjiang, Tibet, Qinghai, Gansu and Ningxia. At present, the company's main office covers four municipalities, 32 major cities.
From the perspective of the company's development, we believe that the company's national layout has been successfully completed. The continuous growth in costs brought about by the previous expansion period will gradually enter a stable period. The company has moved from the stage of capital expenditure to the stage of profit realization. In the future, through premium competition and mergers and acquisitions, if the company's business volume continues to expand, it is expected to enter the oligopoly period.
Additionally, from empirical data, as long as the intermediary branch maintains an average annual agency fee income of more than 50 million, it can have stable profitability and enter the economies of scale.
The company has been expanding since 2010, and in 2011 there were only 10 branches with a profitability of more than 50 million. Currently in 2013 only half a year more than 50 million profitability branches have been 13 years. Considering the full-year data, we believe that the company's "profit manifestation period" characteristics have begun to emerge.
According to the current development trend, we expect the company is expected to achieve 300 billion agency sales revenue in 2013, year-on-year growth rate of 48%, market share of 4.05%; is expected to reach 405 billion in 2014 up and down the agency revenue, year-on-year growth rate of 35%, market share of 4.97% (expected in 2014, the national commercial real estate sales of 8.15 trillion).
3. Three innovative service models to support the company's growth: 1) big data platform: based on customer information, "O2O (Online To Offline)" mode starting point.
Currently, the main real estate information system providers in China are Soufun and E-House. These two systems mainly collect developer information and real estate macro data, and by displaying the above data on their own online platforms to attract home buyers to buy homes. In the above way, developers are passive and wait for buyers to come to buy properties. In the past, when the market was not very competitive, when it was hard to find a home, and when there was not much change in policy, this traditional O2O model was indeed effective in attracting customers. But now the market is gradually entering the information explosion, different regions of the consumer spending differences in the characteristics of increased and intensified competition in the market period, the above passive approach is not conducive to developers to actively understand customer information and develop strategies.
Unlike the traditional e-commerce field, the customer information management system (CIM) developed by Shilian and IMB is mainly based on strategic consulting and brokerage sales. The biggest difference between this system and the previous two systems is that the data source comes from the home buyers, and at the same time, the introduction of the strategic consulting and sales platform to analyze the data and transform it to the developers. The core of this innovative O2O model still lies in promoting offline transactions through data platform analysis; however, the core advantage lies in the fact that developers can actively adjust their design and sales strategies according to regional customer conditions. In the future, with market competition intensifying, Shilian's customer big data platform will help the company to have stronger strategic consulting and sales promotion capabilities.
According to the company's annual sales volume of 300 billion yuan, assuming that the average sales price of each suite is 2 million yuan, the company can collect 150,000 sets of actual transaction data in a year. Considering the visitors who have not yet been sold (assuming that every 10 visitors can be sold 1), second-hand houses, rental customers, etc., we expect that the company's system can collect nearly 1.5 million groups of home buyers' information in a year. Considering the current position of Shilian Real Estate's national layout, the data platform will become a powerful tool for the company's development in three to five years.
The company has already introduced the New Buck "apron system", which has achieved good results. Every employee (below the middle level, including the case manager) will receive a pocket manual before joining the company, which includes all the systems, processes and operation methods related to its business, and all of them are completely standardized. Employees will not be confused after joining the company, and all the problems they may encounter can be solved by looking up the manual.
The above manuals are firmly integrated with the culture of WorldLink and the company's system framework. Employees can take away the manual when they leave their jobs, but the operation procedures and enterprise spirit in the manual can not take root in enterprises other than Shilian. At present, more and more enterprises such as Vanke, Evergrande and China Merchants are trying to build standardized production process. The standardization adopted by Shilian can be effectively connected with developers, so that they can enjoy the same quality of Shilian's high-quality service in any city. Standardization has become an important advantage for the company to bind customers.
3)Derivative businesses are taking shape: asset management and microfinance.
The company's asset management business is mainly targeted at mid- to high-end commercial and high-end residential properties, including property management, office leasing and administrative outsourcing. The company has acquired property companies such as Anxinhang and Qingdao Yayuan. At present, the domestic property management market size of about 40 billion in residential, non-residential 80 billion. In the future, the scale of property management will be around 150 billion.
From the point of view of net interest rate, the interest rate of residential property management is 3-5%, the comprehensive business is 5-7%, and the office building is 8-10%.
From the composition of CBRE's domestic business revenue, property management revenue accounts for 20%, plus leasing, appraisal, administrative outsourcing and financial business (bulk trading) account for 80%.
But the above three items are derived from the huge scale of property management. The company hopes to capture the high-end property market by entering the high-end property management business.
The company's microfinance is mainly to support the first-hand real estate sales business of Shilian Real Estate. At present, the main business scope of microfinance is focused on supporting people who do not have enough down payment to buy a house. Since the credit work related to home buyers can be done through the banking system, the company's small loans are low-risk and highly profitable.
4. The future will replicate the "blue label model": the company is not a heavy asset turnover type of real estate developers, but based on human resources management, experience export, to undertake business outsourcing integrated service providers. At present, the company's cash is abundant, the completion of the national layout of the company's fixed cost stability. We believe that the company's future development will copy the capital market "blue label model", through mergers and acquisitions upstream and downstream of the industry chain, to achieve the integration of the industry chain and new business expansion.
Currently, the company's mergers and acquisitions are mainly categorized into three types, including industry-based M&A, resource-based M&A and capability-based M&A. Industry-based M&A is mainly based on the upstream and downstream expansion of the industrial chain, the pursuit of synergies; resource-based M&A is mainly to obtain each other's strategic advantages in the region, mostly mergers and acquisitions of competitors, to achieve monopoly in the region; ability-based is mainly the whole but not the same, through the independent operation of different brands to realize the expansion of business.
2)Shilian Real Estate has the quality of "Blue Label Model". At present, Shilian has already realized the upstream and downstream expansion of microfinance, guarantee and property industry through the merger and acquisition of Shilian Credit, Shengze Guarantee, Anxin Xing and Yayuan. According to the development pattern of global intermediary firms, the company's future expansion direction should also include appraisal firms, design institutes, commercial operation teams and so on.
Resources and acquisitions of the company's previous acquisition of Jinan Xinli Yigao and Wuhan Jingtian Weidi, to realize the expansion of Shandong and Wuhan. We believe that the company's traditional brokerage business development is stable, will provide support for future mergers and acquisitions upstream and downstream of the industry chain, to achieve the integration of the industry chain and new business development.
5. Bullish, reiterating the valuation of intermediary firms "three-stage theory": we formally raised the company's rating to "buy" in our August 25, 2013 report, "Bullish, the company entered the second stage of the valuation of intermediary firms three-stage theory". At present, the company's fundamentals are good, we continue to maintain our bullish judgment. Shilian real estate report report for the first time put forward the intermediary line valuation trilogy point of view; that the company's future valuation to improve from the following three points: 1) the agency business over-expected growth (corresponding to the dynamic 10-15 times the valuation, similar to the growth of real estate stocks), 2) gross profit margins, the agency settlement cycle and the agency fee average rate is stable, and the beginning of the merger and acquisition of upstream and downstream companies (corresponding to the dynamic 15-25 times the valuation, similar to the growth of stocks) and 3) the agency settlement cycle and average rate is steady, and start to acquire industrial upstream and downstream companies (corresponding to the dynamic 15-25 times the valuation, similar to the growth of stocks). Growth stocks) and 3) emerging business platform (asset management, finance, etc.) scale effect (corresponding to dynamic 25 to 35 times valuation, similar to high-quality perpetual cash flow company). At present, the company has entered the second stage, the current fundamentals will bring substantial improvement in valuation.
6. Investment advice: maintain "buy" rating. In our August 25, 2013 report, "bullish, the company entered the second phase of the valuation of the intermediary line of the second stage", we formally raised the company's rating to "buy". At present, the company's fundamentals are good, we continue to maintain bullish judgment. The company has completed the national layout, the main office covers four municipalities, 32 major cities. At present, the company is in the core period from the capital expenditure stage to the interest rate embodiment stage. We are also optimistic about the company's three major innovations to support the company's future strengths: 1) big data platform. Based on customer information "O2O (Online To Offline)" mode; 2) standardized production. Effectively binding large customers to ensure consistent service quality; 3) Derivative business. Asset management and microfinance. The company is not an asset-heavy real estate developer, but a comprehensive service provider based on human resource management, experience export and business outsourcing. Currently, the company is cash-rich, and the completion of the national layout has stabilized the company's fixed costs. We focus on explaining why we believe that the company can copy the "blue label model", through mergers and acquisitions upstream and downstream of the industry chain, to achieve the integration of the industry chain and new business development. January-September 2013 earnings growth is expected to be 80%-120%. The company's 2013 and 2014 EPS is expected to be 0.83 yuan and 0.99 yuan. As of September 6, the company's share price at 14.84 yuan, corresponding to 2013 and 2014 PE in 17.88 and 14.99 times. Give the company in 2013 25 times price earnings ratio, corresponding to the share price of 20.75 yuan, maintain the "buy" rating.
Risk warning: the industry is facing two major risks of interest rate hikes and policy regulation.
Risk warning: the industry is facing two major risks of interest rate hikes and policy regulation.