EB SECURITIES: China Resources MIXC (01209) continues to achieve high growth in property management business, with significant improvements in quality and efficiency.

EB SECURITIES released a research report pointing out that the mid-term performance of CHINA RES MIXC (01209) exceeded expectations, with the shopping center's performance shining, and significant results in cost reduction, quality improvement, and efficiency enhancement. On September 19, the Federal Reserve announced a 50bp rate cut, reducing the federal funds rate to 4.75%-5.00%. The Hong Kong property service sector saw a significant increase, with leading commercial management company CHINA RES MIXC rising by 7.1%. The company achieved a revenue of 8 billion RMB in the first half of 2024, a year-on-year increase of 17.1%. Revenue from the commercial sector was 2.85 billion, a year-on-year increase of 23.4%; revenue from the property sector was 5.10 billion, a year-on-year increase of 13.8%; gross profit was 2.7 billion, a year-on-year increase of 20.0%, with a gross profit margin of 34.0%, a year-on-year increase of 0.8 percentage points , and a net profit attributable to shareholders of 1.91 billion, a year-on-year increase of 36%; announced a mid-term dividend of 0.279 RMB per share, and a special dividend of 0.575 RMB per share. EB SECURITIES released a research report pointing out that the performance of shopping center operations was outstanding, and the commercial management performance continued to grow. As of June 30, 2024, the company provided commercial operation and property management services for 108 operating shopping centers (78 reserve projects), with a business strategy of resource acquisition, customer growth, cost control, and performance preservation. In the first half of the year, the company achieved retail sales of 100.7 billion in the managed shopping centers, a year-on-year increase of 19.7%. Owner rental income was 12.57 billion, and owner operating profit margin was 67.8%, up 0.6 percentage points year-on-year. The performance of shopping center operations was excellent, driving the company's commercial management business to achieve high-speed growth. In the first half of the year, revenue from shopping center business was 1.89 billion, a year-on-year increase of 34.1%, accounting for 23.7% of the total revenue, with a gross profit of 1.37 billion, a year-on-year increase of 35.4%, accounting for 50.7% of the total revenue. The scale of residential property management steadily expanded, and affiliated companies consistently delivered high-quality projects. As of June 30, 2024, the company managed 1,335 residential projects with a total area of 260 million square meters, with projects from CHINA RES LAND accounting for 53.8% of the total area. In terms of residential property management income, revenue from projects delivered by CHINA RES LAND accounted for 62.6%. From January to August 2024, the total sales amount of CHINA RES LAND was 155.4 billion, ranking fourth on the list of sales of real estate enterprises, with stable sales performance and continued delivery of high-quality residential projects in the future. Benefiting from the expansion of management scale and improvement in product and service capabilities, services provided to community residents such as butler services and product selection grew rapidly. In the first half of the year, revenue from owner value-added services was 0.72 billion, a year-on-year increase of 25.6%. Significant results were achieved in cost reduction, quality improvement, and efficiency enhancement, with plenty of cash and generous dividends. Thanks to organizational changes and cost control, the company's administrative expenses in the first half of the year were 4.1 billion, a year-on-year decrease of 7.1%. The sales and management expense ratio was 6.5%, a year-on-year decrease of 1.5 percentage points, which was the main reason for the better-than-expected performance; the core net profit coverage multiple of operating cash flow was 89.6%, a year-on-year increase of 17.9 percentage points; a total of 1.95 billion was distributed in the mid-term dividend, with a payout ratio of 102%, which was quite generous. Risk warning: Economic environment affecting retail sales in shopping centers and office rental rates; Expansion of residential projects may fall short of expectations.