Huachuang Securities: Maintains a "buy" rating on GREENTOWN CHINA (03900) with a target price of HK$12.3

Huachuang Securities released a research report stating that the accuracy of land acquisition is the core reason for recommending the company. GREENTOWN CHINA (03900) has maintained a high level of land acquisition accuracy since 2022. At the same time, with the support of the product strength of the "good house" era, it has achieved good sales realization. However, the company still needs to digest the old inventory from 2021 and before (with lower gross profit settlement rate) and impairment pressure in the short term. It is expected that the settlement profit may be temporarily under pressure. The bank adjusted the company's EPS forecast for 2026-2028 to 0.22, 0.22, and 0.21 yuan (the previous forecast for 2026-2027 was 0.22, 0.23 yuan), calculated the company's valuation based on the residual income model, approximately 27.5 billion yuan, and gave a target price of 12.3 Hong Kong dollars for 2026, maintaining a "recommended" rating. Main points of Huachuang Securities: Events In 2025, the company achieved operating income of 154.966 billion yuan, a year-on-year decrease of 2.3%; the net profit attributable to the mother was 0.71 billion yuan, a year-on-year decrease of 95.6%. Profit is under short-term pressure, and revenue is expected to continue to decline in the future. The company's operating income in 2025 is about 155 billion yuan, a year-on-year decrease of 2.3%, and the net profit attributable to the mother decreased by 95.6% year-on-year. The main reasons are: 1) adjustments in the real estate industry, the company actively de-stocking long inventory, leading to a decrease in property sales gross margin to 11.2%, a decrease of 0.5 percentage points compared to 2024; 2) an impairment loss of 4.921 billion yuan. Based on the company's planned revenue based on sales, it is expected that there will still be certain pressure on revenue in the next two years. In 2025, the sales amount of self-investment projects decreased by 11% year-on-year, actively replenishing land in deep-digging cities. 1) In 2025, the sales amount of self-investment projects was 153.4 billion yuan, a year-on-year decrease of 11%, and the equity sales amount was 104.3 billion yuan, a year-on-year decrease of 14%; the sales amount in first- and second-tier cities accounted for 84%, a year-on-year increase of 5%, with Hangzhou, Shanghai, and Beijing accounting for 52%. 2) In 2025, the land acquisition amount of equity was 51.1 billion yuan, with an added value of 135.5 billion yuan, a year-on-year increase of 25%, and an equity ratio of 69%. 86% of the added value is in first- and second-tier cities, with Hangzhou, Suzhou, Shanghai, and Xi'an accounting for 68% of the total value. 3) Although the overall land auction market was hot in the first half of 2025, the company acquired some projects with high premium rates. As the real estate market in Hangzhou and Shanghai adjusted, the overall de-stocking speed slowed down. However, with the brand influence and strong trading capacity accumulated in deep-digging cities, the company still achieved good project realization. As of the end of March 2026, the "Land King" project Green City Yilu in Beicai, Shanghai has signed contracts for 161 units, with a contract signing de-stocking rate of 63%, and the Chao Ming Riverside project in Hongkou District opened on March 28, with 44 units sold, and a de-stocking rate of 90%. The bank calculated that the average profit margin of high premium land projects in 2025 was about 4.5%, maintaining a certain profit safety cushion. Continued optimization of debt structure, smooth financing channels. 1) In 2025, the company's cash-to-short-term debt ratio was 2.6 times, with cash and cash equivalents of 63.2 billion yuan, maintaining sufficient liquidity. Interest-bearing liabilities were 133.4 billion yuan, a 2.8% decrease year-on-year; the end-of-period financing cost was 3.3%, a 0.4-percentage-point decrease from 2024. 2) Continuous issuance of domestic medium- and long-term credit bonds, with interest rates decreasing from 4.37% in March to 3.18% in September, further reducing financing costs. Risk warning: Intensity of land acquisition competition affects profit margins, and the difficulty of de-stocking low-quality inventory exceeds expectations.