【行业研究报告】新希望服务-12% dividend yield with cash balance ＞ mkt cap; Maintain BUY

28Mar2024
CMBInternationalGlobalMarkets|EquityResearch|CompanyUpdate
NewHopeServices(3658HK)
12%dividendyieldwithcashbalance>mkt
cap;MaintainBUY
NewHopeServicesreportedindustry-average-levelearningswithNPup
6%YoYinFY23.Thecompanyraiseditsdividendpayoutratioto60%from
48%inFY22,representingayieldof12%,whichboostedtheshareprice
by6%intwodaysafterannouncement.Welikethecompanyforitsclear
strategy,highbusinessconcentration,highdividendyieldandacash/mkt
capratioof>1.MaintainBUYwithTPatHK$2.79,reflecting8x2024EPE.
FY23earningsslightlymissed.Thecompanydelivered6%/11%YoY
growthinearnings/revenueatRMB215mn/RMB1,261mninFY23,slightly
growthinearnings/revenueatRMB215mn/RMB1,261mninFY23,slightly
belowourexpectation.NPmarginedgeddown0.6pptto17.1%butstillled
theindustrygivenitshigherbusinessconcentration.GPmarginnarrowed
2.9pptto34.9%dueto1)activeexpansioninthird-partymarketwherethe
competitionisintensifyingand2)exitofnon-ownerVASthathashigher
margin(segmentrevenuedown26%YoY).Thecompanyexpectstodeliver
10-20%growthinrevenueand5-10%growthinNPgoingforward.
Operationalhighlights.1)RegionalexpansiontowardeasternChinawas
efficientwithrevenuecontributioninBasicPMSegmentexpandedto37.9%
inFY23vs.31.3%inFY22.Thenumberislikelytobestableat40%inthe
futureaccordingtothecompany.2)Itsrenownedcateringservicesbusiness
achieved44%YoYrevenuegrowthinFY23andsighedthreenewcontracts
withvalueofRMB65mnin1Q24.
Dividendpayoutwasliftedonceagainto60%.Thecompanyannounced
adividendofRMB0.16/share,liftingitspayoutratioto60%inFY23vs.48%
inFY22and31%inFY21,representingadividendyieldof12%onthe
announcementday,whichboostedthesharepriceby6%intwodaysafter
theannouncement(vs.HIS-0.5%).Thecompanyconfirmedplansto
maintainitspayoutratioatabove50%goingforward.
Cashbalance>mktcap;maintainBUY.Thecompanyshoweditscash
collectionabilitybygeneratingRMB335mnofoperatingcashinFY23,
+87.1%YoY.IthadcashbalanceofRMB1.15bn(HK$1.24bn)atend-FY23,
alreadysurpassingitsmktcapofHK$1.21bnasatthelasttradingday.We
maintainBUYwithTPofHK$2.79basedon8x2024EPE.Thecompanyis
currentlytradingat5x2024EPE.Risks:less-than-expectedthirdparty
expansion;impairmentriskfromaccountreceivable.