1. INSTITUTIONAL EQUITY RESEARCH
Page | 1 | PHILLISECURITIES (HK) RESEARCH
Color Life (1778.HK)
Community O2O Leader
Hong Kong | Real Estate| Company report 7 April 2016
2015 Performance Surprisingly Outperforming Expectations
Founded in June 2002, Color Life is a group corporation engaging in logistics services, assets
operation and community services. As the largest service supplier providing community
services in residential properties around the world, at present, it has already covered 2001
communities. Recently, Color Life released its 2015 annual results report. It reported a total
revenue of RMB828 million, increased by 112.6% y-o-y, of which RMB590 million was
contributed by the revenue of property management services, equal to 70.8% of the total
revenue and witnessing an increase of 148.1% y-o-y. Influenced by the expansion of service
area, the construction service has recorded a revenue of RMB140 million, with a y-o-y
increase of 54.5% and the value-added service has recorded a revenue of RMB110 million,
with a y-o-y increase of 62.1%.
Company`s Revenue Breakdown (RMB mn)
Source: Company reports, Phillip Securities (HK) Research
The gross profits were increased to RMB455 million with a y-o-y increase of 46.7%, which is
basically in line with expectations. The gross margin was decreased to 54.9% y-o-y, down by
24.7 percentage points mainly due to the acquisition of Kaiyuan International Property
Management and other properties, which caused the large amount of contracting property
management fees and prepaid service fees, thereby driving down the gross margin.
The Company`s cash flow was considerably improved. The annual operating cash flow in
2015 was RMB239 million, representing a y-o-y increase of 317.5%. The annual service area
reached 320 million square meters, with the growth rate of 56.9%. The new service area
including Kaiyuan International was composed by acquisition and derivation evenly. At
present, its business has covered 166 cities. With the new businesses in Hong Kong, Macau,
Taiwan and Singapore, the nationwide layout is generally completed.
Buy (Maintain)
CMP: HKD 5.90
(Closing price as at 5 Apr 2016)
TARGET: HKD 7.12 (+20.7%)
COMPANY DATA
O/S SHARES (MN) : 1000.12
MARKET CAP (HKDMN) : 5,900
52 - WK HI/LO (HKD): 13.5/4.75
SHARE HOLDING PATTERN，，，， %
Splendid Fortune Enterprise Limited 50.4
Tang Xuebin 21.6
PRICE PERFORMANCE，，，， %
1M 3M 1Y
Color Life 6.27 -10.56 -39.86
HSI 3.80 -4.10 -20.96
PRICE VS. HSI
Source: Phillip Securities (HK) Research
KEY FINANCIALS
CNY mn FY14 FY15 FY16E FY17E
Net Sales 389.3 827.6 1064.5 1307.2
Net Profit 145.7 168.4 270.2 366.0
EPS, CNY 0.167 0.168 0.270 0.366
PER, x 0.092 0.084 0.130 0.180
BVPS, CNY 1.100 1.300 1.440 1.626
P/BV, x 4.5 3.8 3.4 3.0
ROE, % 23.3% 14.5% 13.2% 17.8%
Source: Company reports, Phillip Securities Est.
Research Department
(+ 86 21 51699400-105)
research @phillip.com.cn

2. Page | 2 | PHILLISECURITIES (HK) RESEARCH
Color Life (1778 HK) Company report
Total Contracted GFA(`000 sq.m)
Source: Company reports, Phillip Securities (HK) Research
Channel Up of Community O2O Business
In terms of value added services, Color Life completed the 3.0 upgrade in October
2015, expanded the entrance and conducted research on scenario design so that
more clients may use the Color Cloud APP and the viscosity of client may be
enhanced. Meanwhile, the community O2O took shape. As a collective online
operation platform, by the end of 2015, the number of registered users of the Color
Cloud reached 2 million, including 858,000 active users, increasing by 100% and
112.5% respectively. Compared to the statistics in October 2015, there were 60,000
new active users of the community O2O Color Cloud platform. The total accumulated
investment amount of the E Wealth Management reached RMB533 million while
there were approximately 6,000 orders on the E Repair Day with 90% of family users.
The community O2O model is becoming the mainstream of Chinese community
development. As a community O2O leader, Color Life aims to reduce human
resources costs in the businesses such as security, sanitation and landscape in
communities. On the other hand, it attempts to establish an O2O ecosystem by
building an online platform with APP and connecting property owners and
community services. With further popularity of the community O2O mode in the
future, once the community online and offline chain is comprehensively connected,
the market value of Color Life will increase dramatically. Nowadays, the market
penetration of China`s community O2O merely remains around 6%. Except for Color
Life, Vanke, Country Garden and R&F Properties are successively exploring in the
industry with various modes. In order to grasp such opportunity, Color Life must raise
the profitability of the value added business and improve the management system
which has influences on its core value.
Leading the Industry in Service Area and Revenue Growth
Among the property companies, Color Life, China Overseas Property and Zhong Ao
Home are all companies listed on the Hong Kong Stock Exchange and share the
largest market share in the industry. In addition, Lvcheng Property Management Co.,
Ltd. plans to complete listing in the year. In 2015, Color Life outperformed its
competitors with 320 million square meters of service area. At the same time, thanks
to the acquisition of Kaiyuan International in 2015, Color Life realized the fastest
revenue growth in the industry. In the future, Color Life will maintain its M&A plans
and thus it expects a comparatively high revenue growth by 2017. Although the
above-mentioned four companies have their own operating modal and different
positions, Color Life shows its considerably strong core competitiveness through its

3. Page | 3 | PHILLISECURITIES (HK) RESEARCH
Color Life (1778 HK) Company report
leading-edge performance in lots of aspects including the proportion of value added
services, community customers` value mining and resource integration.
Based on the better-than-expected performance of Color Life in 2015 and its future
expansion plan, in combination with its leading position in the industry and the
comparatively high proportion of its value added services, we maintain the "Buy"
rating for Color Life with the 12-month target price of HKD7.12, equivalent to the 22x
EPS in 2016. (Closing price as at 5 Apr 2016)
Total Contracted GFA Comparison (`000 sq.m)
Source: Bloomberg, Phillip Securities (HK) Research
Performance Comparison
Source: Bloomberg, Phillip Securities (HK) Research
Risks
The development of value added business falls short of expectations;
The labor cost increases;
The peer competition tends to be intensified.

4. Page | 4 | PHILLISECURITIES (HK) RESEARCH
Color Life (1778 HK) Company report
Financials
FYE FY12 FY14 FY15 FY16E FY17E
Valuation Ratios
P/E 111.9x 29.5x 29.3x 18.2x 13.5x
P/B - 4.5x 3.8x 3.4x 3.0x
Dividend Yield(%) - 1.9% 1.7% 2.6% 3.7%
Per share data(RMB)
EPS, Adj+ 0.044 0.167 0.168 0.270 0.366
DPS - 0.092 0.084 0.130 0.180
BVPS - 1.100 1.300 1.440 1.626
Growth & Margins(%)
Growth
Revenue 18.6% 67.0% 112.6% 28.6% 22.8%
Operating Income 54.8% 148.0% 8.6% 75.5% 37.9%
Net Income to Common Share 2.2% 228.3% 15.6% 60.5% 35.5%
Margins
Gross profit margin 61.6% 79.6% 54.9% 62.4% 68.3%
Operation profit margin 38.8% 58.3% 29.8% 40.6% 45.6%
Net income margin 19.0% 37.4% 20.4% 25.4% 28.0%
Key Ratios
ROE(%) 31.1% 23.3% 14.5% 13.2% 17.8%
ROA(%) 7.7% 13.9% 7.8% 6.9% 9.2%
Income Statement(RMBmn)
FY12 FY14 FY15 FY16E FY17E
Revenue 233.1 389.3 827.6 1064.5 1307.2
Gross Profit 143.6 309.9 454.5 664.2 892.8
Operation profit 90.4 226.9 246.3 432.2 596.0
EBT 71 212 252 403.0 550.0
Tax -25.5 -61.3 -69.4 -112.84 -154
Net profit 96.5 145.7 168.4 270.2 366.0
Source: Company, Phillip Securities (HK) Research Estimates
(Financial figures as at 5 Apr 2016)

5. PHILL
Color Life（（（（1778 HK）））） Company report
PHILLIP RESEARCH STOCK SELECTION SYSTEMS
We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a
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Total Return Recommendation Rating Remarks
>+20% Buy 1 >20% upside from the current price
+5% to +20% Accumulate 2 +5% to +20%upside from the current price
-5% to +5% Neutral 3 Trade within ± 5% from the current price
-5% to -20% Reduce 4 -5% to -20% downside from the current price
<-20% Sell 5 >20%downside from the current price

6. PHILL
Color Life（（（（1778 HK）））） Company report
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