CICC maintains a outperform industry rating on POLY PPT SER (06049) and lowers the target price to 36.3 Hong Kong dollars.

China International Capital Corporation (CICC) released a research report stating that it maintains the profit forecast for POLY PPT SER (06049) essentially unchanged, expecting the net profit attributable to the parent company to increase by 5% and 3% year-on-year to 1.63 billion yuan and 1.68 billion yuan respectively in 2026 and 2027. It maintains an outperform industry rating and lowers the target price by 15% to HK$36.3 (corresponding to a 2026 target price-earnings ratio of 11 times and 16% upside potential), mainly due to increased uncertainty in profit growth and adjustment in market risk preferences. The company is currently trading at a P/E ratio of 9.5 times for 2026. Key points from CICC: - 2025 performance meets market expectations The company announced its 2025 performance: revenue of 17.13 billion yuan, a year-on-year increase of 5%; net profit attributable to the parent company of 1.55 billion yuan, a year-on-year increase of 5%, meeting market expectations. The company plans to distribute a dividend of 1.401 yuan per share, with a payout ratio of 50%, corresponding to a dividend yield of 5.0%. - Base property management sector supports steady revenue growth By the end of 2025, the company's managed area increased by 6% to 855 million square meters, driving a 13% increase in revenue from the base property management sector. Annual non-owner and community value-added service revenues were under pressure, declining by 17% and 14% respectively. The comprehensive gross profit margin decreased by 0.8 percentage points year-on-year, with the base property management business gross profit margin down by 0.9 percentage points mainly due to structural impacts on non-residential margin rates and increased market competition; the company continued to reduce middle and back-office expenses, with a 1.0 percentage point decrease in sales management expense ratios supporting a essentially stable net profit margin. - External expansion continues to focus on core cities, accounts receivable management under pressure In 2025, the company expanded new third-party projects with an annual contract amount of 29.3 billion yuan, maintaining a leading position in the industry in terms of expansion scale, with over 80% in core 50 cities and contracts over ten million yuan accounting for 56% annually. In terms of property fee collection, the company's collection rate fell by 2 percentage points year-on-year due to economic conditions; trade receivables increased by 24% year-on-year, outpacing revenue growth, with accounts receivable within one year accounting for 89%, reflecting a relatively healthy age structure. - Comprehensive strength to maintain industry leadership in the "15th Five-Year Plan" During the "14th Five-Year Plan" period, the company achieved rapid development in scale and capabilities through the large property strategy; looking ahead to the "15th Five-Year Plan", the company's strategic positioning is as the "chief operator of comprehensive urban governance", with the goal of maintaining industry leadership in comprehensive strength. Looking ahead to 2026, the company targets to maintain a 5% growth in revenue and net profit, continuing its steady and sustainable dividend policy; the bank expects the company to continue to balance scale, growth quality, and cash repayment, continuing its trend of quality development. Risk Warning: Increased competition in third-party external expansion, property fee collection rates and accounts receivable performance may fall short of expectations, and cost control may be weaker than expected.