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Redsun Services Upgraded (HKG:1971) Target $8.80

Redsun Services Upgraded (“Redsun Services” or the “Group”; stock code: 1971), a fast-growing comprehensive community services provider focused on the Yangtze River Delta, has earned CCB International’s optimistic view accolade owing to a recent M&A that will strengthen its Central China and Non-Residential Exposure.

The Group has also been given a “Buy” rating by CCB International with a target price at HK$8.8.

On 31 December 2020, Redsun Services announced it would be acquiring an 80% stake in Wuhan Huidehang Elite Property Service Co. (Wuhan Huidehang) for RMB216 million, implying 13x 2021 forward P/E.

In 2018, 2019 and the first 10 months of 2020, Wuhan Huidehang recorded RMB54 million, RMB55 million and RMB61 million in revenue and RMB11 million, RMB12 million and RMB15 million in net profit respectively. Forecast in 2021, 2022 and 2023, revenue will be RMB86 million, RMB99 million and RMB114 million, while guaranteed net profit will be RMB21 million, RMB24 million and RMB27 million respectively.

For the first 10 months of 2020, gross profit margin and net margin stood at a decent level of c.38% and 24% respectively. Wuhan Huidehang has 29 projects under management (27 in Wuhan alone), equivalent to 1.77m sqm GFA, with 42%, 24%, 20% and 14% in office, residential, public and retail properties respectively, which is enough to considerably strengthen Redsun Services’ exposure in Central China and supplement its non-residential exposure.

Also, the recent share increase of the Group’s major shareholder Mr. Zeng Huansha supports CCB International’s contention that the Group’s shares are undervalued. In the four consecutive trading days from 18 to 23 December 2020, Redsun Services’ major shareholder bought shares on the secondary market in a total consideration of HK$9.71 million, bringing his shareholding to 72.77%, a 0.48 percentage points increase.

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. Also, it has been selected as a constituent stock of the FTSE Global Micro Cap ex US Index by FTSE Russell in December 2020.

發表「優於大市」研究報告 目標價為8.80港元

香港, 2021年1月5日 – (亞太商訊) – 深耕長三角地區、增長迅速的綜合社區服務供應商弘陽服務集團有限公司(「弘陽服務」或「集團」,股份代號1971)獲建銀國際看好其新併購項目將有助加強華中地區和非住宅的的覆盖,發表「優於大市」的研究報告,目標價為8.80港元。



S. Jack Heffernan Ph.Dhttps://www.shayneheffernan.com
S. Jack Heffernan Ph.D. Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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