EB SECURITIES maintains a "buy" rating on Yuexiu Property (00123), and sees a stable and steady development in both residential and commercial properties.

EB SECURITIES released a report maintaining a "buy" rating on Yuexiu Property (00123), with sales performance outperforming the market, steady development in both residential and commercial sectors, healthy and secure financial funds. The company's net profit forecast for 2025-2027 was raised to 13.4/15.4/17.8 billion yuan (from the original forecast of 13.2/15.1/16.1 billion yuan). The current stock price corresponds to a PE (basic) valuation of 14.7/12.7/11.0 times for 2025-2027. Key points from EB SECURITIES: Sales performance outperforms the market From January to August 2025, the company's sales amount was 73.01 billion yuan (a year-on-year increase of 3.7%), which outperformed the market (during the same period, sales of the top 100 real estate companies decreesed by 13.8%). In terms of sales volume and price, from January to August, the sales area was 1.806 million square meters, with an average price of 40,400 yuan per square meter (a year-on-year increase of 36.5%), showing a clear inclination towards high-energy cities. As of June 30, 2025, the company's land reserves were approximately 20.43 million square meters, with 94% located in first and second-tier cities, ensuring sustainable development for the company in the future. It is worth noting that the marginal sales trend slightly declined in August, with a sales area of 169,000 square meters and an average selling price of 32,500 yuan per square meter. The changes in future sales trends need to be further monitored. Real estate settlement gross profit margin hitting bottom, steady development in both residential and commercial sectors In the first half of 2025, the company's operating income was 47.57 billion yuan (a year-on-year increase of 34.6%), with a gross profit of 5.06 billion yuan (a year-on-year increase of 4.4%), and a gross margin of 10.64% (compared to 13.72% in the first half of 2024). The gross profit margin of the real estate development settlement sector is still at a bottoming state. The company continues to promote its strategy of developing both residential and commercial properties. In the first half of the year, commercial property leasing revenue was 2.68 billion yuan, Yuexiu Real Estate Trust Investment Fund's operating income was 9.66 billion yuan, and the overall rental rate (excluding hotels and apartments) was approximately 82% at the end of the period. Yuexiu Services showed steady growth, with revenue of 1.962 billion yuan in the first half of the year and a managed area of approximately 72.31 million square meters. Healthy and secure financial funds, leading industry in financing costs As of June 30, 2025, the company's total monetary funds (including cash and bank balances, fixed deposits, and other restricted deposits) were 44.64 billion yuan. The "three red lines" remained in the green zone, with an asset-liability ratio excluding advance receipts of 64.6%, a net debt ratio of 53.2%, and a cash-to-short-term debt ratio of 1.7 times. In the first half of 2025, the company continued to optimize its debt structure, with short-term debt accounting for 24% and financing costs further decreasing. The weighted average borrowing rate decreased by 41 basis points year-on-year to 3.16%, and the end-of-period average borrowing rate fell below 3%, leading the industry in financing costs.