Target price is HK$9.2 and HK$9.37 respectively
Redsun Services Group Limited (stock code: 1971), a fast-growing comprehensive community services provider focused on the Yangtze River Delta, is given ‘Outperform’ and ‘Buy’ rating by CCB International and CBM international respectively with target price at HK$9.2 and HK$9.37, both famous investment banks have recognized the Group’s outperforming annual results for the year 2020
CCB International mentioned Redsun Services’ diversified business and its continuous expansion of third-parties business, expects third-parties/Redsun Properties (1996.HK) to account for 60%/40% by 2021 and 70%/30% of the Group’s managed GFA by 2022. For community VAS (Value-added Services), the Group plans to ramp-up full-cycle living service, including common area VAS, community ancillary, property brokerage, home decoration, and asset management services. In the case of information technology systems, it will continue to upgrade its management system to reduce operating costs and improve operating efficiency. CCB international thinks Redsun Services has attractive valuation, and is one of the most undervalued stock amongst property management companies, therefore, maintain ‘Outperform’ rating and raise target price from HK$8.8 to HK$9.2.
CMB International thinks good quality M&A (merger & acquisition) accelerate scaling, expects the Group’s compound annual growth rate of revenue and net profit in the next three years will be 50%, and aimed for 60% of managed GFA to come from third-party (including M&A) by 2023; VAS maintain its high growth. Additionally, the Group’s recent acquisitions since its IPO have proved profitable, and helped improved its profitability. For instances, the net profit margin of Wuhan Huidehang and Chuzhou Yurun in 2020 was 24% and 12% respectively, versus 12% of Redsun Services. The Group plans to focus its M&A effort in the Yangtze River Delta where property management fees are generally higher with less chance of margin dilution. CMB International considers Redsun Services’ valuation attractive. Maintain ‘Buy’ rating with target price at HK$9.37.
About Redsun Services Group Limited
Established in Nanjing in 2003, Redsun Services Group Limited is a fast-growing comprehensive community service provider focusing on the Yangtze River Delta. With a vision of “making lives warmer,” the Group has provided and endeavor to continue to “provide customers with high-quality services with sincerity” to serve its customers. The Group has established the regional leading position in the property management market of Jiangsu province and is well-recognised nationwide. The Group was recognized as one of the Top 100 Property Management Companies by CIA for four consecutive years since 2017 and ranked 25th among the 2020 Top 100 Property Management Companies in terms of overall strength. In December 2020, the Group was included by FTSE Russell in the FTSE Global Micro-Cap Index.