CICC maintains a rating of outperform for Yuexiu Property (00123) with a target price of 5.9 Hong Kong dollars.

CICC released a research report stating that YUEXIU PROPERTY (00123) is rated as outperforming the industry. Considering the company's sales resilience, they give a target price of HKD 5.9 per share, corresponding to 0.39/0.38 times the 2026/2027 P/B ratio, with a 59% upside potential compared to the current share price. Key points from CICC are as follows: Performance in 2025 meets market expectations The company announced its 2025 performance: revenue remained flat year-on-year at RMB 86.46 billion, with a gross profit margin of 7.8%, and sales and management expenses ratio flat year-on-year at 4.5%. Core net profit reached RMB 2.6 billion, overall meeting market expectations. Stable financing advantage for local state-owned property companies The year-end interest-bearing debt volume remained basically stable at RMB 104.8 billion, with short-term and domestic borrowings accounting for 26% and 71%. During the period, the comprehensive financing cost decreased by 44 basis points to 3.05%. The company issued three new domestic bonds totaling RMB 2.9 billion (with interest rates of 1.95%-2.5%) and one overseas bond totaling RMB 2.85 billion (with an interest rate of 3.3%). Focus on core 6 cities for investment, jointly acquired large land parcel in Guangzhou with the group at the beginning of the year In 2025, the company acquired a total of 25 residential land projects with approximately 2.78 million square meters of gross floor area and invested RMB 24.4 billion, implying a land acquisition intensity of 38%. Strengthening cooperation with leading landmark enterprises and resource-based enterprises, investments in the six cities of Beijing, Shanghai, Guangzhou, Shenzhen, Hangzhou, and Xiamen accounted for 96.3% of the total. By the end of 2025, the company's existing land bank totaled 18.55 million square meters, with an unsold value of RMB 332.8 billion, of which 75% is in the core 6 cities. In addition, in February of this year, the group and the company jointly acquired the Guangzhou Zhujiang New Town Horse Racecourse project for RMB 23.6 billion (consolidated by the group), a large integrated development involving luxury commercial properties, offices, high-end residential, and hotel apartments. Focus on the progress of key projects and sales pace In 2025, the company achieved sales of RMB 106.2 billion, with the Greater Bay Area and East China accounting for 31% and 26%, respectively. At the same time, the average transaction price increased by 23% to RMB 36,000 per square meter. The Shanghai Fei Yun Yue Fu and Beijing He Yue Wang Yun contributed RMB 15.9 billion and RMB 9.5 billion in sales, respectively, receiving wide market acclaim. The bank estimates that the company's remaining volume of salable resources exceeds RMB 200 billion, and if the post-market for new housing remains stable and the pace of deliveries accelerates, the company may maintain a sales scale of over RMB 100 billion for the whole year. Risk warning: The sales prosperity of the new housing market may not meet expectations, and the realization of land acquisition profits may not meet expectations.