Everbright Securities has reaffirmed its "Overweight" rating on SHIMAO SERVICES (00873). The decision considers the company's aggressive expansion in the third-party market and the steady increase in the proportion of its non-cyclical business, indicating a positive fundamental outlook. Based on a comprehensive assessment, the forecasted net profit attributable to shareholders for 2025-2026 is 210 million yuan and 340 million yuan, respectively. A new forecast for 2027 is set at 380 million yuan, corresponding to a price-to-earnings (P/E) ratio of 6.5x, 4.1x, and 3.6x, suggesting an attractive valuation. The main points from Everbright Securities are as follows.
Recent data shows that the related company, Shimao Group, achieved total contracted sales of 2.81 billion yuan in January-February 2026. A property developer sales ranking released on February 28, 2026, placed Shimao Group 26th in the industry with these sales. For the full year of 2025, Shimao Group reported total contracted sales of 23.95 billion yuan, ranking 33rd in the industry.
The business structure of SHIMAO SERVICES continues to be optimized, with the share of non-cyclical business steadily increasing. In the first half of 2025, revenue from property management services, community value-added services, non-property-owner value-added services, and urban services was 2.81 billion yuan, 540 million yuan, 60 million yuan, and 210 million yuan, respectively. The revenue share of property management services increased by 9.2 percentage points year-on-year to 77.7%, further enhancing the company's overall resilience to economic cycles. While revenue from property management services grew, the gross profit margin remained stable, indicating a continued focus on refined operations and strict quality control over managed projects.
Third-party expansion reached a record high, with a rapid increase in non-residential projects. As of June 30, 2025, the company's services covered 123 cities, serving 1,466 projects with a diverse client base including residential, public buildings, universities, industrial parks, and hospitals. The total gross floor area under management was 220 million square meters, with a contracted gross floor area of 340 million square meters. In the first half of 2025, the company focused on expanding in the third-party market, achieving a record high in new annualized contract value from third-party competitive bidding of 960 million yuan, a 54.6% increase compared to 620 million yuan in the same period of 2024. The new contracted gross floor area added was 40.1 million square meters, a significant 126.6% increase from 17.7 million square meters in the first half of 2024. The number of secured non-residential projects grew rapidly, with a contracted area of 33.4 million square meters, accounting for 83.3% of the newly added contracted area.
Risk warnings include uncertainties related to accounts receivable impairments and goodwill impairments, alongside a continued downturn in real estate-related business.