According to the Futu securities research report, Zhongan Smart Life (02271) deeply cultivates the Yangtze River Delta and radiates the whole country. Its management area growth rate and independent third-party management area growth rate are relatively fast, and the related projects reserve is abundant. Property management is the core business of the company, contributing about 70% of the company's revenue. With sufficient cash on hand, the company has a high gross margin in value-added services, maintains high-quality profitability.

The main points of Jin Bridge Securities are as follows:

Deeply cultivating the Yangtze River Delta and radiating the whole country, diversified development of business formats.

Zhongan Smart Life deeply cultivates the Yangtze River Delta and radiates the whole country, with relatively fast growth rates in management area and independent third-party management area, and good comprehensive gross profit rate and net return on assets. The related companies operate steadily with a project reserve of 8.63 million square meters, which provides sufficient project reserves for the company; the average gross profit rate of value-added business in 2023 is 42.05%, with a higher gross profit rate.

As the management scale continues to increase, property income has increased significantly.

Property management is the core business of the company, contributing about 70% of the company's revenue. By 2023, the company realized property management revenue of 0.261 billion yuan, a year-on-year increase of 16.80%. In terms of management scale, as of the end of 2023, the company had a management area of 16.43 million square meters, a year-on-year increase of 28.02%; with 138 contracted projects and a contracted area of 20.8 million square meters. In recent years, the company has vigorously expanded various types of property services. In addition to residential property, the business format also covers non-residential properties such as government office buildings, industrial parks, hospitals, schools, and museums. The non-residential property management revenue in 2023 is 0.078 billion yuan, a year-on-year increase of 30.30%, accounting for 29.99% of the total revenue. As of the end of 2023, the company provided property management services for 26 non-residential properties, with a total building area of 2.563 million square meters, a year-on-year increase of 65.46%.

Independent expansion has achieved remarkable results, with sufficient reserve of related projects.

The company actively expands independent third-party property management services. By the end of 2023, the company managed a building area of 7.541 million square meters from independent third parties, accounting for 45.91%, with an additional third-party expansion area of 1.634 million square meters. In 2023, the management income from third-party properties was 86.03 million yuan, accounting for 32.90% of the total income, a year-on-year increase of 35.11%. Zhongan Group has a land reserve of 8.63 million square meters, with the Yangtze River Delta accounting for 84.00%. It is mainly distributed in various cities and regions of the Yangtze River Delta and is expected to support future development for the next 5 years. The completed but unsold or undelivered building area is 1.99 million square meters, and the project reserve is abundant.

The company has sufficient cash on hand and maintains high-quality profitability.

As of the end of 2023, the company had cash and cash equivalents of 0.177 billion yuan, a year-on-year increase of 296.44%. The company's gross profit in 2023 was 0.119 billion yuan, a year-on-year increase of 2.13%, and the gross profit margin was 33.8% in 2023. In 2023, the gross profit margin of value-added services for real estate developers was 41.50%; the gross profit margin of the company's community value-added services was 42.60%. Overall, the gross profit margin of value-added services is relatively high. The company's net profit margin in 2023 was 14.08%, and ROE reached 26.98%, maintaining high-quality profitability.