A recent research report maintains profit forecasts for GREENTOWN SER (02869), projecting 2025-26 core operating profit to grow 15% year-on-year to RMB1.83 billion and RMB2.11 billion respectively (2024 comparison base includes MAG contribution; excluding MAG from calculations, 2025 growth rate would be 21.5%). Net profit attributable to shareholders is expected to grow 17% year-on-year to RMB920 million and RMB1.07 billion respectively. The outperform rating is maintained, and considering improved full-year performance confidence and changes in overall market risk appetite, the target price has been raised 8% to HK$6.0, corresponding to 19x 2025 target P/E ratio and 18% upside potential. The company currently trades at 16.0x 2025 P/E ratio and an estimated 4.4% dividend yield based on 70% payout ratio.
**1H25 Performance Slightly Exceeds Expectations**
The company announced 1H25 results: revenue of RMB9.29 billion, up 6% year-on-year; core operating profit of RMB1.07 billion, up 25% year-on-year; net profit attributable to shareholders of RMB610 million, up 23% year-on-year, slightly exceeding expectations.
**Basic Property Management Business Steady Progress**
The basic property services segment, accounting for approximately 70% of revenue, grew 10% year-on-year, solidifying the company's overall growth foundation. New contract annual saturated contract revenue reached RMB1.52 billion, comparable to the same period last year. Expansion quality continues to improve: core city projects increased by 5 percentage points year-on-year to 95%; average property management fee for new contracts reached RMB3.7 per square meter per month (existing portfolio at RMB3.2 per square meter per month).
**Comprehensive Profit Margin Improvement, Better-than-Expected Cost Control**
Property services, park services, and consulting services segments saw gross margin improvements of 0.4, 3.2, and 0.2 percentage points respectively year-on-year, driving overall gross margin up 0.5 percentage points. Sales and administrative expenses decreased 9% year-on-year, with expense ratio declining 1.3 percentage points.
**Adequate Cash Position, Relatively Stable Cash Flow**
The company's broad cash position (cash on hand plus time deposits) reached approximately RMB5.45 billion, an increase of RMB1.14 billion compared to the same period last year. Trade and other receivables grew 12% year-on-year. Operating cash outflow was RMB400 million, slightly higher than RMB360 million in the same period last year.
**Long-term Commitment to Quality Development**
The analysis suggests the company will continue leveraging its quality brand advantages, continuously expanding high-quality projects while actively eliminating and updating existing project portfolios (annual churn rate of 4-5% over the past three years), maintaining quality growth and cash-generating profits. The reform and efficiency improvement process is expected to continue, with profit margin improvement trends likely to persist.
**Continued Active Shareholder Return Policy**
With adequate cash on hand and relatively good collection conditions, the company maintains its target of operating cash flow coverage of net profit at over 1x for the full year. Based on ample funding conditions, the company is expected to maintain its active shareholder return strategy. The company has maintained dividend payout ratios exceeding 70% for the past two years while continuing share buybacks, with 1H25 cumulative buyback amount of approximately RMB60 million.