Resilient growth and Quality transformation: A perspective on the "quality enhancement" logic of SHIMAO SERVICES (00873) 2025 financial report

Against the backdrop of a deep adjustment in the real estate industry, the property management industry is undergoing a historic migration from "scale is king" to "high-quality development". As a pioneer in the high-quality development of the industry, SHIMAO SERVICES (00873) delivered a highly resilient and valuable annual report in 2025. This is not only a summary of the stage of its "six-dimensional comprehensive new development" strategy, but also a strong exploration of the industry's future evolutionary path. In 2025, under the dual pressure of deep industry adjustments and intensified market competition, SHIMAO SERVICES did not choose blind expansion, but successfully built a high-quality growth system with quality as the core and efficiency as the support through brand empowerment and lean operations. This shift from "land grab" to "value competition" not only stabilized the company's foundation in the fluctuations, but also achieved breakthroughs in core profitability and quality expansion in the market. Lean operations build a solid foundation for development, achieving a double leap in profit quality and efficiency. Analyzing SHIMAO SERVICES' financial data in 2025, the most significant feature is that "profit growth" outperformed "revenue growth", indicating that the company's operational model has shifted from extensive growth to more penetrating lean operations. During the reporting period, the company achieved operating income of RMB 7.88 billion, with actual business growth of nearly 10% after excluding factors such as the disposal of Sands Tian, demonstrating the robust internal driving force of core business. More notably, core net profit reached RMB 600 million, a year-on-year increase of up to 20%, and the core net profit margin also steadily increased by 1.0 percentage points to 7.3%. This improvement in profit quality is particularly valuable in the current industry environment. It is worth mentioning that the contrarian increase in profit margin is not simply due to cost compression, but rather resonance from optimized revenue structure and enhanced management efficiency. In 2025, property management services, as the company's "ballast stone", contributed RMB 5.82 billion in revenue, accounting for 73.8%. Its role in stability became increasingly prominent. Among them, residential format revenue increased by 8.3% to RMB 3.78 billion, solidifying revenue foundations through continuous quality improvement and enhanced customer stickiness; meanwhile, the non-residential sector exhibited stronger growth momentum, with office buildings, public buildings, and other high-value segments achieving rapid growth rates of 17.2%, 19.4%, and 7.7% respectively, reaching RMB 1.72 billion. This structural optimization has enabled SHIMAO SERVICES to no longer overly rely on a single business format, but to form a risk-resistant pattern of simultaneous development and synergistic development of residential and non-residential businesses. On the management side, precise operational reforms are another major engine for profit growth. SHIMAO SERVICES continuously enhances its ability to reduce management expenses through the deployment of "three lean" actions. It is understood that in 2025, the company's management expenses decreased significantly by 15.7% year-on-year to RMB 700 million, and sales expenses further decreased by 8.3% after three consecutive years of decline, benefiting from the de-layering of the organizational structure and continuous refinement of management granularity. The company strictly controls budget management and resource allocation, directly reducing service procurement costs through strengthened supply chain construction and centralized procurement scale effect. This deep cultivation of internal capabilities enables every investment to tangible operational benefits, thus releasing greater profit potential while maintaining stable revenues. For SHIMAO SERVICES, the continuous iteration of service quality is the core logic to maintain its competitive advantage. In 2025, the company comprehensively promoted the "Heart Gravity Live+" quality renewal action, iterating and upgrading service standards from "standardization". In the residential field, the company spared no effort to invest in hardware renewal, promoting the lighting of 18,000 household access routes and activity spaces throughout the year, completing 613,000 elevator maintenance and 540,000 square meters of greening maintenance. This "beyond expectations" service to homeowners was reflected directly in the high volume of 1.96 million homeowner visits, greatly enhancing community emotional connections and service perceptions through "warm-service" and deep cultural connections with the community's elderly and children. Ultimately, the premium effect of quality not only solidified the repayment rate of existing businesses but also paved the way for the development of value-added services, with community value-added service revenue growing by 9.1% to RMB 1.32 billion, accounting for 16.8%, successfully opening up new profit ceilings. Accurate external expansion and technological evolution reshape industry moats in multidimensional competitions. If lean operations stabilize the "present" of SHIMAO SERVICES, then precise market expansion and deep technological empowerment anchor its "future". In 2025, SHIMAO SERVICES demonstrated strong aggressiveness in market expansion, with an added full-year saturated income of RMB 2 billion, a year-on-year increase of 35.1%, which broke historical records and signified its independent external development capabilities ranking at the forefront of the industry. However, unlike the past pursuit of area scale in "land grab", the logic of external expansion in 2025 presents a high "value preference". In the newly added 548.36 million square meters of contracted area, high-level urban cluster projects accounted for as high as 70.2%, with first-tier, new first-tier, and second-tier city projects accounting for 73.2%. This "urban deep cultivation" strategy focusing on core regions not only significantly increased single-city saturated income in cities such as Shanghai, Xiamen, and Xi'an but also lowered boundary costs through concentrated management density per unit area, achieving a balanced transformation of scale and benefits. In exploring the boundaries of business formats, SHIMAO SERVICES is no longer limited to traditional management within walls but has upgraded to a comprehensive operator of industrial services. In 2025, the company won bids for benchmark projects in various niche tracks, such as Renmin University of China, Tianjin Jinyao Group Industrial Park, and Hunan Provincial Traditional Chinese Medicine Hospital. This reflects the increasing maturity of SHIMAO SERVICES' "ten vertical and ten horizontal" business format layout and its specialization in high-end industrial services, university management, and other high-threshold tracks of professional competition. At the same time, the company's "mega integration" development strategy integrates property management services with silver-haired economy and pet economy deeply, which is unleashing astonishing growth potential through the construction of a cross-border ecosystem. For example, in the elderly care services deeply cultivated under the background of aging, the revenue in 2025 has increased to RMB 220 million, a nearly 16% increase. This model of using traditional property management as a flow entry and creating incremental value through professional services is becoming a typical template for its second growth curve. The underlying power supporting this series of complex business operations and efficient management is SHIMAO SERVICES' steadfast investment in AI technology and digital transformation. It is understood that in 2025, by promoting the AIS intelligent energy management platform, the company achieved multi-scene linkage, with an average energy consumption reduction efficiency of 24%; and the field-deployed service Siasun Robot&Automation, its single-machine labor efficiency has reached 1.5 times that of manual labor. From security inspection to intelligent customer service, the application of AI is systematically reshaping the value chain of property management, making management actions more preemptive and transparent. As the management stated, the industry competition is now evolving from the contest of single capabilities to the comparison of comprehensive capabilities, and technological empowerment is the key to building core barriers. Looking ahead to 2026, with the policy dividends of "quality improvement in stock" and the macro opportunities for the elevation of the status of property management in the "14th Five-Year Plan", SHIMAO SERVICES, with its stable operational landscape, strong external expansion momentum, and intelligent operation system, is steadily progressing towards high-quality, sustainable development in the distance as a long-distance runner.