20260825-招银国际-绿城服务-02869.HK-Trading_scale_for_quality_in_1H26_maintain_BUY_6页_1mb

Greentown Service (2869 HK) Summary

Core Content

Greentown Service (2869 HK) reported a 6.3% YoY increase in revenue for 1H26, reaching RMB9.87bn. This growth was primarily driven by the resilient performance of its basic property management (PM) segment, which grew by 10.1% YoY, while the value-added services (VAS) segment faced a 6.7% YoY decline. The company's core operating profit (GP–SG&A) and attributable net profit (NP) increased by 16.3% and 15.2% YoY, respectively, to RMB1.25bn and RMB0.71bn. These results exceeded the full-year guidance for core OP growth of over 15%, despite a 34% YoY increase in receivable impairment.

The company's gross margin improved by 0.5ppt to 20.0%, while the SG&A ratio dropped by 0.6ppt to 7.3%, contributing to the profit growth. Management has maintained its full-year guidance and reaffirmed a high payout, with a minimum ordinary dividend payout ratio of 50% and a possible special dividend. The target price (TP) remains unchanged at HK$6.55, based on an 18x 2026E P/E ratio.

Main Points

• Revenue Growth: 1H26 revenue rose 6.3% YoY to RMB9.87bn, with basic PM up 10.1% and community VAS down 6.7%.
• Profit Growth: Core operating profit grew 16.3% YoY to RMB1.25bn, and net profit increased 15.2% YoY to RMB0.71bn.
• Gross Margin and SG&A Ratio: Gross margin lifted by 0.5ppt to 20.0%, and SG&A ratio dropped by 0.6ppt to 7.3%.
• Managed GFA Growth: Managed GFA grew 8% YoY to 580.3mn sqm, with a significant increase in terminated GFA (17.6mn sqm) due to the company's strategy to remove low-quality projects.
• New Contracts: New contracts value reached RMB1.46bn in 1H26, accounting for 37% of the full-year target, slightly below the 38% in 1H25.
• Dividend and Buybacks: The company has a strong cash position of RMB6.56bn and plans to continue buybacks. If buybacks match FY25 levels, the FY26E dividend yield could reach 7.4% including buybacks.
• Target Price: The TP remains at HK$6.55, with the stock currently trading at HK$4.31, representing a 51.9% upside.
• Outlook: The company maintains its full-year guidance, with core OP growth expected to exceed 15%, and is optimistic about the long-term benefits of its active clean-up strategy.
• Challenges: Community VAS remains under pressure due to the macroeconomic environment, and risks include weaker collections from high new-home vacancy, slower third-party expansion, and further decline in VAS.

Key Information

• Stock Performance:
  • Market Cap: HK$13,931.6m
  • 12-Month Price Performance: As per FactSet
• Shareholding Structure:
  • Orchid Garden Investment: 31.9%
  • Lilac International Investment: 13.3%
• Share Performance:
  • 1-Month: +3.9%
  • 3-Months: -5.7%
  • 6-Months: -3.4%
• Financial Highlights:
  • Revenue is projected to grow at an average rate of 8.2% in FY26.
  • Net profit is expected to grow to RMB1,030.1m in FY26, with EPS at RMB0.33.
  • P/E ratio for FY26E is 11.3x.
  • Dividend yield for FY26E is projected to be as high as 7.4% including buybacks.
• CMBIGM Ratings:
  • The rating is BUY, indicating potential for over 15% return in the next 12 months.
• Key Risks:
  • Weaker collections due to high new-home vacancy.
  • Slower third-party expansion.
  • Further decline in community VAS.

Financial Summary

Income Statement (RMB mn)

Balance Sheet (RMB mn)

Cash Flow (RMB mn)

Conclusion

Greentown Service's 1H26 performance shows resilience in its core PM segment, with a focus on quality and long-term growth. The company's strategy of terminating low-quality projects has led to a higher managed GFA clean-up rate, potentially improving margins and collection rates. Despite challenges in the VAS segment due to macroeconomic pressures, the company's financial health and stable dividend policy support the BUY rating. The TP remains at HK$6.55, with a strong cash position and a projected 18x P/E ratio for 2026. Key risks include macroeconomic headwinds and potential challenges in new-home vacancy and third-party expansion.