Zhongjin: Expected growth will continue to rely on increases in basic property management volume to drive the search for cost-effective opportunities.

Golden Securities released a research report stating that looking back at the market in 2024, real estate beta is still an important factor influencing the stock price volatility of property management companies. Most major stocks continue to show a trend of rising and falling together with related development companies. At the same time, individual stocks may show certain independent market trends due to factors such as their own operational resilience, internal reform progress, and market value management actions. Looking ahead, Golden Securities believes that the performance of stock prices in the sector and real estate development are still difficult to completely decouple, but the overall volatility of the former may be narrower than the latter, mainly due to robust growth expectations and continued dividend increases providing value support. At the same time, some property management targets may still benefit from operational improvements, dividend incentives, and other catalytic factors to show absolute investment opportunities. Golden Securities' main points are as follows: - Growth is expected to continue to rely on the increase in basic property management volume, with receipts linked to the overall economic situation. The bank expects the growth structure of core covered enterprises in 2024-25 to continue the business development trends of the past 1-2 years, with most companies' core growth coming from the increase in scale and operational efficiency of the basic property management sector. The bank predicts that the industry's collection rate and accounts receivable in 2024 are likely to continue the trend of pressure seen in the first half of the year, and core covered enterprises are expected to rely on collection management measures and other items on the balance sheet (such as accounts payable and prepaid items) to support operating cash flow; in the medium to long term, the industry's collection and receipt situation is expected to be related to the overall economic situation. - The impact of the real estate on the fundamentals is expected to weaken, but trading sentiment may continue a certain degree of inertia. The bank predicts that with the sector's growth rate changing and the shift in growth structure, the real estate exposure of core covered enterprises' profit side may continue to decrease in the next two years; at the private enterprise level, the bank expects that some risks associated with the balance sheet of private enterprises may gradually enter the effective disposal stage. Looking ahead, considering that there is often a lack of significant incremental information between the earnings periods of property management companies and that investment thinking has a certain degree of inertia, the bank expects that the trading performance of property management companies may continue to be influenced by the trading in the real estate sector. On the other hand, considering that the overall business model of the property management industry is more robust, with expectations of steady profit growth and the industry's dividend central also on an upward trajectory, the bank expects that the volatility of stock prices in the sector will be smaller compared to real estate stocks, and there may be attractive opportunities for dividend yield investments during the correction process, with a left-hand layout strategy having better security. - The sector is currently trading at 11.5 times the 2024 market-weighted P/E ratio and 10.0 times the 2025 market-weighted P/E ratio, with an expected dividend yield of 5.5% in 2024. The bank recommends participating in sector investment opportunities along two trading approaches: first, selectively positioning in stable targets with long-term investment value in stock price fluctuations influenced by real estate beta factors; and second, positioning in absolute income opportunities brought about by operational improvements. Risks - Risks related to real estate, industry collection rates, and operating cash flow falling short of expectations, changes in resident demands for property services after policy document updates, etc.