BOCOM INTL: Downgrades the target price of CHINA OVS PPT (02669) to HK$5.25, maintaining a "Buy" rating.

BOCOM INTL released a research report stating that it has lowered the target price for CHINA OVS PPT (02669) by 16.7%, from HKD 6.3 to HKD 5.25, while maintaining a "Buy" rating. The bank believes that the company's scale will still maintain moderate growth, but it still faces pressure from industry adjustments in the short term, thus lowering its revenue and profit forecasts. The bank believes that the company can continue to strengthen its long-term competitive barriers by leveraging its state-owned enterprise background, brand, stable financial status, and forward-looking layout in the non-residential and urban service sectors, waiting for the industry to recover. In the first half of 2026, CHINA OVS PPT achieved operating revenue of RMB 7.485 billion, a year-on-year increase of 4.5%. Facing challenges from economic fluctuations and intensified competition in the property management industry, the gross profit margin decreased by 2.0 percentage points year on year to 14.9%. The profit attributable to shareholders was RMB 701 million, a decrease of 9% year on year, which was in line with market expectations, and the return on equity remained at a high level of 23.2%. The company proposed an interim dividend of HKD 0.10 per share, an increase of 11.1% compared to the same period last year, corresponding to a payout ratio of approximately 43%, an increase of about 8 percentage points compared to the first half of 2025. During the period, new contracts were signed for approximately RMB 2.497 billion, with an additional managed area of 37 million square meters, of which 85.9% came from independent third parties. As of the end of June 2026, the total managed area reached 495.4 million square meters, an increase of 3.7% compared to the end of last year. The business structure continued to optimize, with non-residential projects accounting for 76.8% of the new area, of which urban services accounted for 61.1%. During the period, due to the rigid increase in labor costs and the proactive optimization exit of some projects, the company's gross profit margin declined from 16.9% in the same period last year to 14.9%, with gross profit decreasing year on year by 8% to RMB 1.113 billion. The company partially offset the above pressure through cost control and expense optimization. The company held cash and bank balances of approximately RMB 5.733 billion and had no bank borrowings. Operating cash flow performed steadily, with the accounts receivable provision level decreasing from 11.1% at the end of last year to 9.6%.