CICC: Maintains GREENTOWN SER (02869) Outperform rating, target price of HKD 6.0.

Zhongjin released a research report stating that due to the positive trend of GREENTOWN SER (02869) in improving quality and efficiency, as well as the potential pressure of impairment of receivables on the financial statements, the core operating profit forecast for 2026-27 is revised upward by 4% and 5% to 2.16 billion and 2.37 billion yuan, while the net profit attributable to shareholders is revised downward by 2% and 4% to 990 million and 1.09 billion yuan. The industry outperformance rating and target price of 6.0 Hong Kong dollars are maintained, corresponding to a target P/E of 17 times in 2026 and a 41% upside potential. The company is currently trading at 12/11 times 2026/27 P/E. Key points of Zhongjin are as follows: The performance in 2025 basically meets the expectations of the bank The company announced its 2025 performance: revenue of 19.2 billion yuan, a year-on-year increase of 7%; core operating profit increased by 25% to 1.88 billion yuan year-on-year; attributable net profit was 880 million yuan, a year-on-year increase of 30% after restatement compared to the previous year, and 12% before restatement, which basically meets the bank's expectations. The company announced a full-year dividend of 0.24 Hong Kong dollars, with a dividend payout ratio of 76% and a dividend yield of 5.0%. Steady development of basic business, comprehensive improvement in profitability The area under management at the end of 2025 increased by 11% year-on-year, driving a 10% increase in revenue for the basic property sector; full-year revenue from new projects reached 4 billion yuan, a year-on-year increase of 7%. Gross profit margins for the three major business segments were all higher than the previous year, with a comprehensive gross profit margin increasing by 0.5 percentage points, while the selling and management expense ratio decreased by 0.9 percentage points. Stable cash flow, abundant cash on hand, and strengthened impairment of receivables Operating cash flow for the year recorded an inflow of 1.53 billion yuan, a year-on-year increase of 4%; book cash and deposits were 7 billion yuan, a year-on-year increase of 17%. The company made a new provision for impairment of trade receivables of 550 million yuan (compared to 220 million yuan in the same period last year), with 350 million yuan written off and 190 million yuan provisioned, leading to a cumulative provision ratio increasing by 2.4 percentage points to 12.4%. Moving towards a new three-year period of high-quality development, positive shareholder returns expected to continue The company will continue its strategic plan for high-quality development, continuously deepen operational efficiency, aim for a 45% increase in core operating profit by 2028 compared to 2025; at the same time, target a 15% increase in core operating profit by 2026, with the basic property segment maintaining a 10% growth, and improvements of 0.5 percentage points in gross profit margin and selling and management expense ratio respectively. In terms of shareholder returns, the dividend payout ratio for 2023-25 is projected to be 72-76%, with the year-to-date cumulative repurchase amount accounting for 9-22% of the net profit attributable to shareholders for the year, and the bank expects its active shareholder return strategy to continue. Impairment trends expected to remain relatively stable The main reason for the increase in provision for impairment of long-aged receivables is the write-off of trade receivables for the year, with the balance of trade receivables at the end of 2025 increasing by 5% year-on-year to 5.1 billion yuan, and the age distribution remaining relatively stable compared to the previous year. The bank believes that the volume of impairment provision in 2026 may grow moderately compared to the previous year. Risk warning: New project contract value lower than expected, deterioration of collection situation beyond expectations.