Equity, Bottom-up Analyst, Investics Research

Sameer Taneja

Equity, Bottom-up Analyst

Investics Research

It is important to note that the information provided by Investics Research is based on publicly available data and own knowledge, which has been gathered and analyzed from a variety of sources. While every effort has been made to ensure the accuracy and completeness of the information provided, it is not guaranteed to be free from errors or omissions. All forecasts and estimates are based on information that has been obtained from public sources that are considered to be reliable. The sources include but are not limited to, company announcements, exchange filings, presentations, etc. Investics does not guarantee the accuracy and completeness of the forecasts, estimates, and/or other information.

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Binjiang Service Group / Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/binjiang-service-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28940:1" rel="noopener">Binjiang Service Group Co Ltd (3316 HK)</a> is a solid property management service company.  I believe this is a stock that can easily double over the next 2-3 years. Key investment highlights for this company are : 
1)Improving Contracted GFA to GFA under management trend: This provides visibility for a growth run rate of 30-35% CAGR revenue over the next 3-4 years.  
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/127/156/original/image_9394663121586332474306.png?1586332480" class="editor-image img-responsive" data-smartkarma-image-id="127156"></figure>
source: company filings
note: GFA ( Gross Floor Area for the uninitiated ) 
2) Supportive parent ( <a href="https://www.smartkarma.com/entities/hangzhou-binjiang-real-estate-grp-co-ltd" target="_blank" data-smartkarma-citation="entities:15658:1" rel="noopener">Hangzhou Binjiang Real Estate Grp (002244 CH)</a> ): In addition to the 26 mn of contracted GFA of which the parent broadly has 70%,  the parent has a landbank of  8mn sqm approximately, 100% of which will be allotted to the company which lends further visibility to this pipeline.  
3) Net cash of 1.08 bn RMB which represents roughly 40% of the market capitalization ( 2.7 bn RMB ): This allows the company ample opportunities to search for accretive opportunities for property management services companies. 
4) Generous Dividend Payout and a Buyback Mandate: The company proposed a generous dividend payout policy of not less than 50%.  In 2019, they paid out close to 70% of profits as dividends. The company also has a buyback mandate for 10% of the outstanding shares.
5) Driven and Incentivized Top Management: The chairman and president of the company Mr. Zhu holds a 13.36% stake in the company. Mr. Mo Jianhua who also holds 13.36%, is the chairman of the strategic committee of the company. They are the second-largest shareholders of the company after the founder Mr. Qi Jinxing who owns 47.5%.  The company is also exploring share options to incentivize top management.
6) Under the radar and inexpensive: Bellwether companies in the sector trade at valuations that are 25-30x FY20 and 22-24x FY21. <a href="https://www.smartkarma.com/entities/binjiang-service-group-co-ltd" target="_blank" data-smartkarma-citation="entities:28940:1" rel="noopener">Binjiang Service Group Co Ltd (3316 HK)</a> trades at a significant discount to them at 15x FY20 and 11x FY21 ( ex-cash PE is 9.3x FY20 and 7.3x FY21).
This company can strongly rerate with good execution over the next few years.

Binjiang Service Group Co Ltd (3316 HK) is a solid property management service company.  I believe this is a stock that can easily double over the next 2-3 years. Key investment highlights for this company are : 
1)Improving Contracted GFA to GFA under management trend: This provides visibility for a growth run rate of 30-35% CAGR revenue over the next 3-4 years.  

source: company filings
note: GFA ( Gross Floor Area for the uninitiated ) 
2) Supportive parent ( Hangzhou Binjiang Real Estate Grp (002244 CH) ): In addition to the 26 mn of contracted GFA of which the parent broadly has 70%,  the parent has a landbank of  8mn sqm approximately, 100% of which will be allotted to the company which lends further visibility to this pipeline.  
3) Net cash of 1.08 bn RMB which represents roughly 40% of the market capitalization ( 2.7 bn RMB ): This allows the company ample opportunities to search for accretive opportunities for property management services companies. 
4) Generous Dividend Payout and a Buyback Mandate: The company proposed a generous dividend payout policy of not less than 50%.  In 2019, they paid out close to 70% of profits as dividends. The company also has a buyback mandate for 10% of the outstanding shares.
5) Driven and Incentivized Top Management: The chairman and president of the company Mr. Zhu holds a 13.36% stake in the company. Mr. Mo Jianhua who also holds 13.36%, is the chairman of the strategic committee of the company. They are the second-largest shareholders of the company after the founder Mr. Qi Jinxing who owns 47.5%.  The company is also exploring share options to incentivize top management.
6) Under the radar and inexpensive: Bellwether companies in the sector trade at valuations that are 25-30x FY20 and 22-24x FY21. Binjiang Service Group Co Ltd (3316 HK) trades at a significant discount to them at 15x FY20 and 11x FY21 ( ex-cash PE is 9.3x FY20 and 7.3x FY21).
This company can strongly rerate with good execution over the next few years. 

Binjiang Service Group: A Solid Property Management Service Company

China

Binjiang Service Group Co. Ltd. operates as a reputable property management service provider. The Company offers property management services including security, cleaning, gardening, repair, maintenance, and ancillary services to at residential and non-residential properties. Binjiang Service Group serves customers in China.

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Binjiang Service Group (3316 HK)

Binjiang Service Group: A Solid Property Management Service Company

Binjiang Service Group Co Ltd (3316 HK) is a solid property management service company. I believe this is a stock that can easily double over the...

Sameer Taneja

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